AR KETI N G PRO BLE MS

ME LVI N T HOM AS C OP E LAN D , P h D . .

P R O FE SS O R O F M AR K E TI N G
DI R E C T O R O F B U R E A U O F B U SI N E S S R E SE AR C H

G R AD U A T E S C H O O L O F B U S I N E S S AD M I N I S TR AT I O N ,
H AR V AR D U N I VE R SI T Y

A . W . S H AW C O M P A N Y

w YORK C HI C A GO LO N DO N
 COP YRI GHT 1 9 20

A, W . SHAW COMP AN Y

t b
Fir st P rin ting Sep em er . 1 9 90
.

S e co n d Prin t ing Aug ust . 1 9 21

,

b
Third Prin t in g. N ov em er. 1 9 22

PR I N T ED I N TH E UN I T E D S T ATE S O F AH E BI C A
 P R E FAC E

HE p u rp o s e of this b o o k is to p r o vi de n cr e t e
T
co

p r o b le m s in m a r k e t in g f o r u s e in instr u cti o n .

M any o f th e p r o b lem s st a t e d h er e a lre a d y h a v e

b ee n u s ed in th e c l a ss w or k in M ark etin g in th e G ra d u
a t e S ch o o l o f B u sin e ss A d m inistr a ti o n H arvar d Uni
,

v ersity a n d it is fo r this c l ass th a t t h e b o o k p ri m a rily

,

is p u b lish e d T h e s u bj ec t o f M a rk etin g as a fi e l d o f
.
,

s ci e ntifi c st u d y a n d instr u cti o n is in its ea rly st ages

,

of d e v el o p m e nt . C o ns e q u e ntly ,
th e tr ea t m e nt o f
t op i cs t ak e n u p in this b o o k is f ar fr om p erfe c t This .

is t o b e c o nsi d e re d a p re li m in ary st age in th e syst em a ti c

d e v e l o p m en t o f t h e s u bj e ct by t h e p r o bl em m e th o d o f
instr u cti o n Fu rth e r st u d y a n d e xp eri e n ce will d ou bt
.

l ess sh o w m a ny o pp o rt u niti e s f or i m p ro v e m e nt an d
r e fin em en t .

T h e p r o bl e m s ar e s e l ect e d t o ill u str at e sp e cifi c

p o ints ,
t o b e d e v e l o p e d by a n a lysis a n d d is cu ssi o n .

Alth o u gh fr e qu ently t h e i d en tity o f th e in d ivi d u a l co m

p a ny o r e st a blish m e nt is d is gu is e d t,
h e c a s e s a r e b a se d

u p o n a c tu a l b u sin ess e x p e ri en ce . T h e p r o bl em s ar e in
th e f o r m in whi ch th e y co m e b ef o r e b u sin e ss m e n .

I wish t o a ckn o wl e d ge m y in d e bt e d n ess t o m y

f o rm e r c o ll eagu e M r P au l T C h e ringt o n with wh o m
,
. .
,

it w as m y p l e as u r e to d is cu ss s e v era l o f th es e p r o bl em s
d u ri n g th e y e a rs th a t w e w e re b o th e n gage d in t e a ch
in g this s u bj e ct . T o D r E d win F G ay f o rm e r D e a n
. .
,

o f t h e H a rv a r d B u sin ess Sch o o l ,

I o w e a d ee p d e bt o f
gr a tit u d e f o r t h e c o n st a nt e n co u r a ge m e nt a n d insp ira
ti on th a t h e ga v e m e in th e st u d y o f M ark e tin g T h e .

a ct u a l co m p l e ti o n o f this u n d ert a kin g h as b ee n d u e

in l arge m ea s u r e t o th e fri en d ly int e r est a n d e nth u si a sti c

e n co u r a gem ent o f D e a n W a ll a ce B D o nh a m . .

C a m bri d ge , M ass ach u s e tts M E LV I N T C O P E LA N D .

J une 1 0, 1 920 .
 C ON T E N T S

P AR T P AG E

I I N T R ODU C T I O N
.
—
M A R K E T I N G M E TH O DS
P O LI C I E S

II . C O N D I T I O N S D E T E R MI N I N G D E MA N D

III . R E T A I L T RAD E

IV WH OLE S ALE TR A DE
.

V M E T H O DS
. OF M AR K E T I N G M AT E R I A LS ,
E QUI P

ME N T AN D SU P P L I E S FO R WH O LE S A L E
C ON S U M P T I ON

VI . SA LE S M AN A G E M E N T

VI I B R AN D S TRA D E
.
,
MA R K S , A N D
-
A DV E R T I S I N G

VII I P R I C E P O LI C I E S
.
 P AR T I

*
I NT R OD U C TI O N —
M A R KE TI N G M E T H O D S

AR K E T I N G m ay b e d e fin e d as a st u d y o f th e
p rin c i p l e s th a t go v e rn t h e p o li ci e s o f b u sin ess

m a n a gem ent in th e di strib u ti o n O f c o mm o di

ti es fro m p ro du ce rs t o co nsu m ers Thi s in clu d es t h e .

a ctiviti e s o f r et a il a n d wh o l e sa l e m e r c h a nts , m a n u
’
fa c t u r ers s al es o r ga niz a ti o ns , th e vari o u s a ge n ci es
e n ga ge d in th e d istrib u ti o n o f r a w m a t e ri a ls , a n d a ll

o th er m ea ns o f f acil it a tin g a n d p r om o t in g t h e s a l e o f

m er ch a n d is e .

T a k e a sh o e m a n u fa ct u r e r , for e x am p l e , wh o h as
j u st o r ganiz e d a n ew b u sines s T h e first m ark etin g .

p r o bl em f o r h im is th e d e t er m in ati o n o f th e a gen ci es
throu gh whi ch hi s p r o du ct is t o b e s o l d He h as a .

c h o i ce b e twee n s ellin g e ntir e ly t o wh o l esa l e rs e ntir e ly ,

t o r e t a il e rs o r t o b o th
, He h as a ch o i ce f u rth e rm o r e
.
, ,

b e tw een th e vari ou s typ es o f r e t ail e rs u nit st o r es —

,

d epart m e nt st o r e s ch a in st o r es a n d m a il o r d e r h ou s es
, ,
.

He p r o b ably wi ll fin d it in ad vis a bl e t o p l a n t o s e ll
in d is crim in at e ly to a ll th es e So m e d e gr e e o f s e l e cti o n
.

will b e e sse nti a l Th er e is a ls o th e p o ssibility th a t h e

.

m ay e l e ct t o o pe ra t e a ch a in o f m a n u fa ctu r er s r et a il
’

bran ch es .

Fo ll o win g this s e l ecti o n o f a ge n ci e s a n d int e rwo v e n ,

with th e s e p r obl em s q u esti o ns r e l a tin g t o t h e m a nu

,

factur er s s a l e s o r ga n iz a ti o n a ris e H o w l a r ge a sa l es
’
.

fo r ce sh all h e m a in ta in ? Wh a t p l a n fo r m a n age m ent

o f t h e s a les fo r ce is t o b e d e v e l o p e d ? I s a st o ck d e p art
m e nt t o b e o p er a t e d ? Th e n co m e th e p r o bl e m s o f
bra n ds . I s thi s m a nu fa ct u r e r t o s ell his p ro d u ct
‘
A s u bst an t ial po rt io n o f t hi s c h a pt er was i ncl u d e d i n a pa pe r
rese n t ed at t h e m ee t in g o f t h e Ass ociat io n o f Co lle gi a te S h oo ls o f c
us i ness
, C hic ago M ay 7 t h 1 9 20 a n d p u blis h ed i n T he J ou rnal of
, , ,

P oli tical E con om y Vo l XXV I I I p p 3 75 398

, .
, .
-
.
2 MARK E TIN G PR O BL E M S
u nbra n d e d e ntire ly u n d e r his o w n bra n d o r u n d er
, ,

wh o l e s a l e rs a n d r e t a il e rs p riva t e bra n d s ? Wh a t is
’ ’

to b e his ad ev rtisin g p o li cy ? H o w a r e his sh o e s t o b e

p ri ced ? Th es e a r e typ i ca l m ark e tin g p ro bl e ms th a t

th e sh o e m an u fa c t u rer m u s t c o nsi d e r . Si mi l a r p r o b
l e m s a r e o f e ve ry da y o ccu rr e n ce in m a ny in du stri es
a n d tra d es .

T h e m e th o d s o f m a rk e tin g m e r cha n d is e fa ll int o

two m a in gr o u p s m e th o d s u s e d in m a rk etin g
g o o d s f o r r e t a il d istrib u ti o n a n d ( 2
, ) m e th o d s u se d in
m a rk e tin g go o d s f o r wh o l es a le co ns u m p ti o n . T he
m a rk e tin g p r o cess e s a r e e sse nti ally d i ffe r e nt f or th es e
tw o gr o u p s o f p r o d u cts . Fo r s o m e go o d s th a t a r e t o
b e s o l d a t r et a il a p r o cess O f a ss em b lin g th e p r o d u cts
o f n u m e r o u s m a n u f a ct u r ers o r p r o d u ce rs is n e cessa ry ,

a s in t h e ca s e o f f o o d s s o l d by wh o l e sa l e gr o ce rs . Fo r
o th ers , a s in t h e a gri cu lt u ra l i m p l em ent tra d e the
,

p r o d u c ts o f o n e m a n uf a c t u r e r c a n b e d istrib u t ed t o
th e r e t a il e rs fr e q u e ntly with o u t a n int e rm e d i a ry p r ocess
o f a ss em blin g . T h e p r e d o m in a nt c h a ra ct e risti c o f t h e
tra de in goo d s s o l d thr o u gh r e t ail st o r es h o w ev er is , ,

t h e d istrib u ti o n o f m e r ch a n dis e s o th a t it ca n b e p ar
c e le d o u t in s m a ll u nits r e t a il e d t o in d ivi d u a l c o n s u m
,

ers wh o p u r c h a s e f o r p e rs o n a l u s e o r gr a tifi ca ti o n .

T a k e a m a nu fa ct u r er o f co tt o n c l o th fo r e x a m p le, .

I n th e Unit ed St a t es a l o ne to s ay n o thin g o f f o r e i gn
,

cou ntri e s , th er e a r e m ore th a n p o t e nti a l

c o ns um e rs o f his p r o d u ct E a ch c o ns u m e r o r d in a rily
.

wi ll pu r ch as e o nly a few ya r d s o f c l o th a t o n e ti m e .

T h e p r o bl em o f this m a n u f a ct u r e r is t o fin d m ea ns o f
s ecu rin g a d istrib u ti o n o f his p ro d u c t wh er e by as m a ny
o f th e s e c o ns u m er s as p o ssibl e m a y e ff e ctiv e ly b e giv e n

a n o pp o rt u nity t o b u y th es e go o d s in t h e f o rm a n d in

th e q u a ntity th a t th e y d e sir e .

T h e go o ds th a t a r e s o l d f or wh o l e sa l e c o ns u m p ti o n
in cl u d e ra w m a t e ri a ls ; s em i m a nu fa ct ur ed p rod u cts
-
,

s u ch as c ru de ir o n a n d st ee l an d lea th er ; e qu i p m e nt ;
a n d m a chin e ry s u p p li e s . T h e r aw m a t eri a ls m u st b e
as s em bl e d in l ar ge l o ts a n d u s u a lly it is e ss e nti a l th a t

th ey b e car e fu lly gr a d ed Th es e m at e ri a ls ar e u se d in
.

lar ge q u antiti es by i n d i v i du a l p u r ch as ers T h e se m i .

 M ARK E TIN G M E TH OD S 3

m a nu fa ctu re d m a t e ri a ls si m il a rly a r e s o l d in l ar ge l o ts
a cco r d in g t o w ell d e fin e d s p e cifi cati o ns o r gr a d es
-
.

E q u i p m e nt a ls o is ge n e r a lly a b u lk sa l e , a lth o u gh in
s o m e insta n ce s this sh ad e s d o wn to s m all in di vi d u al
p ur ch as e s .

T h e m ark e t for go o d s s o l d fo r wh o l es a l e c o n s u m p
ti o n o rd in arily is c l early d e fin ed an d o f n a rr o w sc op e
in c o m p ariso n with t h e m ark e t fo r goo d s s o l d a t r e t a il .

T h e p u r ch a s e o f go o d s fo r wh o l es a l e co nsu m p ti o n , f u r
th erm o r e , is d et er m i n ed n o t by t h e p e rs o n al n ee d s o r
p e rs o n a l d e sir es f or gra tifi ca ti o n o f th e p u r ch a s e r b u t
acco r d in g t o p u r e ly b u s in e ss c o nsi d er a ti o ns o f q u a lity ,

u tility , an d p ri ce Th es e c o nsi d e ra ti o ns ar e go v ern e d

.

by the p r o du ct int o w h i ch th e m a t eri a ls ar e to e nt e r

o r by th e p rod u cti o n re q uir em e nts o f t h e p l a nt in

whi ch the m at eri als o r m achin e s a r e to b e u s ed .

T ak e th e m a rk e t fo r r aw co tt o n , for inst a n ce .

Th er e a r e o nly fr o m o n e to tw o th o u s a n d m an u fa c
tu r ers in t h e Unit e d St a t e s wh o pu r ch a se r a w c o tt o n .

T h e n u m b e r O f p u r ch a s e rs o f a n y Sp ecifi c grad e o f raw

co tt o n is e v e n le ss This m a rk e t , th e re fo r e , is o n e
.

tha t is cl e a rly d efin ed I t is a m ark et , fu rth erm o re , in

.

whi ch t h e in d ivi du a l s a les ar e l a rge T h e p r obl em s in

.

t his raw m a t eri al m a rk e t ar e q u it e d iff er ent fro m th e

p r obl em s i n t h e fini sh e d cl o th m a rk et , wh e r e th e co tt o n
m a nu fa ct u r e r is s ee kin g t o s e l l his p r o d u ct f or d is tri
bu tion t o in div id u al co n s u m ers .

Let u s co nsi d er n o w t h e su b d ivisi o ns o f t h e m eth o ds

-

o f m a rk e tin g e a ch O f th e s e gr o u ps O f p r o d u cts T he .

‘
m e th o d s o f m a rk e t in g go o d s fo r ret ail d istrib u ti o n are
d ivi d e d int o thr ee s ecti o ns c o n d iti o ns d e t e rm i ni n g
d em a n d ; ( 2) r e t a il tr a d e ; ( 3 ) wh o l e s a l e tra d e .

Con di ti ons Deter mi n i n g Dem a n d

Som e o f th e q u esti o ns fo r co nsi d era ti o n with r ega r d
to c on d iti o ns aff e ctin g d e m a n d ar e th e fo ll o win g :
Wh o w il l u s e th e p ro d u ct ? Wh a t ar e th e co ns u m ers ’

b u yin g m o tiv es a n d h a bits ? I n wh a t fo rm d o th e y

p r e f e r t o b u y t h e p r o d u ct ?
For a st a t e m e n t o f t h e f u n ct io n s o f v ari ou s t ype s of m e rch a n ts ,
s ee Bu t le r , D e Bo we r , a n d Jo n es , M a rk et in g M ethod s .
 MA R K ETI N G PR O BL E M S
T h e p o t e nti a l m a rk e t fo r a m a n u fa ct u re r o f w o rk
m e n s o v e ra lls is d e finit e ly li m it e d t o m e n wh o a r e
’

e n ga ge d in o c c u p a ti o ns wh e r e t h e u s e o f o v e r a ll s is

n e ce ssa ry T he first t a sk o f s u ch a m a n u fa ct ur er is t o
.

d e t e rm in e th o s e o c c u pa ti o ns a n d t h e geo gr a phi ca l l o ca
ti o n o f t h e m a rk e t H is p ro bl e m is si m p l e co m p a r e d
.

with th e p ro bl e m s o f n u m ero u s o th e r m a n u fa ct u r e rs .

Whil e th e re a re s o m e p r o d u cts o f a l m o st u niv e rsa l

d e m a n d , s u ch a s ce rt a in a rti cl e s o f fo o d , n e v e rth e l e s s ,
in m o s t inst a n ce s a n inv e sti ga ti o n wi ll sh o w th a t t he
p u r ch a s e rs o f a ny p r o d u ct co m e m a inly fr o m p a rti cu l a r
l ss es o f co ns u m ers As th e first st ep in
c a . t h e d et e r
m in a ti o n O f m a rk e tin g m e th o d s it is im p o rtan t th a t an ,

a n a ly s is sh o u l d b e m a d e t o a s ce rt a in t h e d efin it e
,

cl a ss e s o f co ns u m e rs t o b e a i m e d a t .

So m e o f th e co nsi d e r a ti o ns to b e t a k e n int o a ccou nt

in this a n a lysis a r e wh eth er th e p ro d u ct is for in d ivi d u a l
o r f a m ily u s e th e a ge a n d s ex o f th e u s e rs ru r a l o r
, ,

u rb a n d e m a n d th e o ccu p a ti o n o f th e u s e rs r a ci a l
, ,

infl u e n ces li vin g c o n d iti o ns s u ch as h o m e o w n e rshi p

, ,

t h e infl u en ce o f c lim a ti c co n d iti o ns p r o vi n ci a lis ms in ,

d e m a n d s u ch as th e d em a n d for l e ft h a n d p l o ws in -

“ ” *
s o m e d istri cts or th e y ok e l trad e in c l o thi n g a n d ,

t h e infl u e n ce o f cu st om A m a n u fa ct ur e r o f a brea k
.

fast foo d for ex a m p l e w o u l d fin d d iffi c u lty in s e llin g

, ,

his p ro d u ct o n th e co ntin e nt o f E u r op e b e ca u s e o f th e ,

lo n g est ablish ed cu st o m whi ch r estri cts th e co nt in e nta l

E u r o p e a n br ea kf ast t o r o ll s a n d c o fiee
'

B u yin g m o tiv e s a n d h a bits are e qu a lly w o rthy O f

c o ns i d e ra ti o n in t h e e l e m e nt a ry a n a lysis o f th e m a rk e t .

G r o ce ri es f o r inst a n ce ar e in th a t cl a ss o f m er ch an dis e
, ,

th a t o r din arily is pu r ch as e d wh ere it is m o st c o nv e ni ent

fo r th e h o u s ewife Arti cl es o f w o m en s wea rin g ap
.
’

p a r e l o n t h e o th e r h a n d u s u a ll y ar e b ou gh t by t h e
, ,

sh op p in g p ro cess I n p u r ch a sin g a coa t o r a go wn

.
,

t h e h o u s ew ife wish es t o c o m pa r e styl e q u ali ty an d ,

p ri ce in s e v e ra l sh o p s b e f o r e m akin g h er p u r ch as e .

T h e s e l e cti o n o f m ark e tin g m e th o d s fu rt h e rm o r e , ,

d epe n ds u p o n wh eth e r t h e b u yin g m o tiv e is t o s e cu r e

See ls o R y G iles O d d Bu yi n g Ha b its o f t he Am erican C ustom er
a a ,
,
P r inte rs I A pr i l 22, 1 9 20, pp 1 48- 1 6 5
’
nk, .
 MARKE TIN G M E TH OD S 5

eco n om y in l a b or o r e co n o m y in p ri ce t o s e cu r e d ur a ,

b ility o r t o s a tisfy a d e sir e f or a n o v e lty o r wh eth e r ,

th e pur cha s e is m a d e a s a n e cessity o r a s a l u xu ry .

I s th e a rt i cl e o n e fo r whi ch th e r e will b e a r ep ea t
d em a n d fr o m u s ers ? A br ea kf a st f o o d m a n u fa ct u r e r ,

for e x am p l e ca n c o u nt u p o n r ep ea t d em a n d fo r hi s
,

p r o d u ct p r o vi d e d it is s a tisfact o ry t o co ns u m e rs
,
T he .

m a n u fact u r e r O f a v acu u m cl e a n e r o n th e co ntra ry , ,

can e x p e ct r ep e a t o r d e rs fr o m co ns u m e rs o nl y a t in fr e

q u e nt int e rv a ls His t a sk is r a th er c o ntinu a lly t o d ig

.

u p n ew p ur ch a s e rs T h e m a n u fa ct ur e r o f a sa fe ty
.

r a z o r ca nn o t e x p e ct a s u bst a nti a l r ep ea t d e m an d for

th e r a z o r its e lf b u t h e can cou nt u p o n a r e p ea t d em a n d
,

for th e bl a d es u s ed in th e r a z o r O bvi o u sly th e typ e

.
,

o f s a l e s o r ga niz a ti o n t o b e d e v e l o p e d m u st b e S h a p e d

in p a rt a cco r din g to wh eth e r o r n ot a r ep ea t d em a n d

is a nti ci pa t e d Th es e ill u stra t e a few o f th e b u yin g
.

h a bits a n d m o tiv es th a t m u st b e t a k e n in t o a ccou nt .

I nfl u e n ces ar e a t w o rk co nst a ntly t o ch an ge b u yi n g

h a bits T h e in cr eas ed u se o f au t om o bil es by fa rm e rs
.
,

for e x a m p l e is l e n gth eni n g t h e fa rm ers r a di u s o f int er

’
,

e s t a n d t e n d in g t o m a k e th e fa rm d em a n d fo r n u m e r o u s

p e rs o na l a n d h ou s e h o l d a rti cl e s m o r e a ki n t o city
d ema n d th a n it h as b ee n in th e pa st T h e sp r ea d o f.

e d u ca ti o n a l fac il iti e s a n d th e intr o d u c ti o n o f b e tt er

m ea ns o f tra nsp o rt a ti o n a n d c omm u ni ca ti o n c o nst a ntly

ar e a ff ectin g b u yin g h a bits P u bli c o p ini o n fin a lly
.
, ,

m ay infl u e n ce b u yin g h a bits This p u bli c o p ini o n m ay

.

’
b e e x p r ess e d in o r ganiz ed f o r m thr ou gh h ou s e wiv e s
lea gu e s thr ou gh th e l ab e l l ea gu es o f tra d e u n i o ns
, ,
’
thr ou gh s u ch o r ga niz ati o ns as a c o ns u m ers l eagu e o r ,

it m ay m a nife st its elf in u n o r ga n iz e d f o r m t h r o u gh

th e d e v e l o p m e nt o f a s e nti m e nt in f a v o r O f o r a ga inst
a c ert a in p r o d u ct .

Sh a ll th e go o d s b e s o l d in p a ck a ges o r in b u lk ? T h e
a nsw e r t o this q u e sti o n in its l a st a n a lysis d e p e n d s u p o n

th e p r e f e r e n ce o f th e co ns u m e rs Att a cks U p o n th e
.

p ack a ge syst e m ar e o f fr e q u e nt o ccu rr e n ce N e v er .

th eles s t h e q u antity o f go o d s s o l d in p ack a ge s co n

,

s t an tly is in cr e a sin g n o t thr o u gh c o e r ci o n by m a n u

,

fa ctur er s b u t b e cau s e m a ny co ns u m ers p r e f e r to b u y

,
6 MARK E TIN G PR OBL E M S
th e m e r ch an d is e in th a t f or m G e n e r a l ru l e s ca nn o t
.

b e l a i d d o wn a s t o wh e th er go o d s sh o u l d b e s o l d in
p a ck a ge s o r in b u lk T h e .
p r o bl e m is o n e f o r c ar e f u l

a n a lysis in e a ch in d ivi d u a l ca s e t o d e t e r m in e th e
, ,

m ark e tin g m e th o d s th a t a r e t o b e u s e d .

T h e n a t u r e o f t h e p r o d u ct a n d th e b u yin g m o tiv e s
a n d h a bits o f c o ns u m ers a r e a m o n g th e chi e f infl u e n ce s

d et er m inin g t h e s e l e cti o n o f th e ty p e o f r e t a il st o r e
thr ou gh which th e pr o du ct is t o b e d istrib u t ed .

R eta i l Tr a de
A l arge m aj o rity o f th e r e t a il st o r e s in th e Unit ed
St at e s a r e u nit st o r e s So m e ti m e s th e y a r e c a ll e d
.

” ”
in d ep e n d ent st o r e s o r r e gu l a r st o r e s A u nit st o r e .

is a st or e with o u t a n e l a b o r a t e d ep a rt m e nt a l o r gan
,

iz a tio n th a t is o wn e d a n d m a n a ge d a s a n in d ep e n d e nt
,

u nit f o r t h e s a l e o f go o d s thr o u gh p e rs o n a l s a l e s m a n

shi p Unit st o r e s ar e u s e d m o st e xt e nsiv e ly f o r th e

.

d istrib u ti o n O f m e r ch a n d is e s u ch as gr o ceri es h a r d ,
’
w ar e agri cu ltu r a l im p l em e nts sh o es m e n s c l o thin g
, , ,

a n d f u rnishin gs j e w e lry c i ga rs a n d t o b a cco a n d d r u gs

, , ,
.

Unit st o re s f u rnish th e m o st n u m er ou s o u tl e ts fo r
m a ny kin d s O f m e r ch a n d ise Th e y p ro vi d e th e o nly
.

m e a ns wh ere by l ar ge n u m b ers o f co ns u m ers c a n b e

r ea ch ed r egu larly Th e y ar e a d ap t a bl e t o th e s ervi ce
r e q u ir em e nts o f th e ir p a tr o ns Fr e qu e ntly th e pr o
.

p r ie tor o f a u nit st o r e h as b u ilt u p a str o n g p e rs o n a l

cli e nt e l e T h e m a rk e t fo r m er ch a n d is e d istrib u t e d
.

thr o u gh u nit st o r e s is n o t d o m in at ed by a few l ar ge

p o w erfu l b u ye rs .

A m an u fa ct ur e r wh o el e cts to d istrib u t e his p r o d u ct

thr o u gh u nit st o r es , h o w e v er e n co u nt ers d iffi cu lty in
,

in d u cin g a l ar ge n u m b er o f in d ivi du a l r et a il ers t o

h an d l e hi s p r o d u c t e ff e ctiv ely Wh il e th er e ar e m a ny
.

n o t abl e e x cep ti o ns n e v e rth e l ess a s u bst a nti a l n u m b e r

,

o f u nit st o r e s a r e n o t o p er a t e d e ffi ci e ntly T h e s el e c .

ti o n o f this typ e o f st o r e a s t h e m ark e tin g a gen cy ,

th er efo r e p r es e nts a s eri es o f d iffi cu lt com p l ex

, ,

p r o bl em s .

For s o m e co m m o diti e s a m a n u f a ct u r er fin d s it
a d v a nt a geou s t o s el ect u nit st o r es t o a ct a s e x cl u siv e
 MARK E TIN G ME TH ODS 7

a ge nts o n e in each l o ca lity This p o li cy is ex em p lifi ed

, .

b y s e v era l l ar ge c l o thin g m anu fa ct u r ers O th e r c l o th .

i n g m a nu f act ur ers wh os e p r o d u ct p r o b a bly is o f e q u a l

,

m e rit f o ll o w t h e o p p o sit e p o li cy o f n o t b u il din g Up

,

a syst em o f e x cl u siv e a ge n ci e s Th er e ar e s u bst anti al .

r eas o ns f or an d a gainst this sys t em .

A n o th e r typ e O f st o r e th a t gen erally is o perat ed o n

th e u n i t p rin ci p l e is th e c o m p any s t o r e T his h as .

c o m e in t o e s p eci a l p r o mi n e n ce d u rin g th e la st f e w

y ears o f risin g p ri ces T h e Am e ri ca n W o o le n C o m

.

p a ny f o r e xa m p l e est ablish e d a st o r e a t its p l ants i n

, ,

L awr en c e M ass ac h u s etts in 1 9 1 9 for th e sa l e o f

, , ,

m e r ch a n di s e t o it s e m p l o y ee s Si m il a r st o r e s h a v e .

b ee n o r gan i z ed by s ev er al o th er l ar ge e m p lo y ers o f
l ab o r T o th e m a nu fa ct u r e r o r wh o l es a l er s ee kin g
.

d istrib u ti o n f o r his p r o d u ct th e c o m p any st or e p r e ,

s ent s a pr obl em b ecau s e o f th e d ou bt a s t o its p er

m an en cy an d th e fri cti o n th a t it cau s e s with m a ny o f
th e u nit st o r e s with whi ch it c o m p et e s .

T h e r e t a il wh o l es a l e st o r e is a n o th e r instit u ti o n
-

th a t com pli ca t es th e s a l e s p r o bl em f or m any a m a n u

fa ct u re r Su ch a st o r e is o n e th a t ca rri e s o n a r e t a il
.

b u sin ess an d a ls o o p era t e s a wh o l e s a l e d epart m e nt .

’
A s t ore O f this typ e o r d inarily d em a n d s wh o l es a l e rs
d is cou nts I t is th e r ef o r e in a p o siti o n t o b u y goo d s
.
, ,
’
f or it s r e t a il d e p a rt m e nt a t m a n u fa ct u r ers wh ol e s al e
p ri ces . O ft e nti m e s it b e co m e s a tr o u bl e so m e c o m
p e tit o r o f t h e u nit st o r e s t o w hi ch th e m a n u f a ct u r e r
ca nn o t a ff o r d t o s e ll a t wh o l e s a l e a n d whi ch a r e f o r ce d

t o b u y fr o m wh o l es al e rs at p ri ce s hi gh e r th a n th o s e a t
whi ch th e r e ta il wh o l e s al e st ore pu r chas e s its
-

m e r ch a n d is e .

T h e M e tr op o lit a n s p eci a lty st o r e es p e ci a lly f o r ,

’
a rti cl es s u ch as w o m e n s w ea rin g a pp a r e l h a s b e co m e ,

an im p o rt a nt fa ct o r in t h e s a l e o f s o m e ki n d s o f m er

ch a n d is e This typ e o f st o r e h as o p erat in g e x pe ns es

.

q u it e s i m il ar t o th o s e o f t h e o th e r typ es o f st o r e s wi th
wh i ch it co m p e t e s I ts m a in a d va nt ages a ppea r t o b e
.

th o s e th a t a ccru e fro m s peci aliz a ti o n .

A d epart m e nt st o re acco rd in g t o th e cu st o m ary ,

u s age o f th e t e r m is a r et a il st o r e o r ga ni z e d o n a
,
8 MARK E TIN G PR OBLE M S
d ep a rt m e nt al syst e m in whi ch o n e O f th e l ar ge d ep a rt
m e nts is d r y go o d s . Wh er e in d o e s th e d ep a rt m e nt
st o r e h a v e its chi e f a d v a nt ages ? I ts siz e fr e qu e ntly
g iv e s it a b u yin g a d v a nt a ge
. O ft e nti m es it is a bl e t o

o bt a in wh o l e s a l e p ri ces o r hi gh d is cou nts b e cau s e o f

th e l a r ge q u a ntiti e s th a t it p u r ch a s e s . I ts siz e , h o w
e v e r , d o e s n o t giv e it a n y a d v a nt a ge a p p a r e ntly in

o p e r a tin g e x p e ns e s
. Fr o m s u ch s ca nty inf o rm a ti o n a s
is n o w a va il abl e , it app ea rs th a t th e ra ti o o f o p era tin g
e x p e ns e s t o s a l e s is a s hi gh in d ep a rt m e nt st o r e s as in

u nit st o r e s ; fr e q u e ntly t h e e x p e ns e s a r e hi gh e r in

d ep art m ent st o r e s in p r o p o rti o n t o s a l e s . Som e o f th e

fail u re s O f d epart m e nt st o r e s d u rin g th e l a st t en y ears
h av e b een d u e , t h ere is r eas o n t o b eli ev e , t o a m ist a k en
th eo ry th at a l a rge v o l u m e o f b u sin ess n ecess arily
m ea ns e co n om y in o p e ra ti o n .

T h e chi e f a d v a nt a ge o f a d ep a rt m ent st o r e , it
s eem s , is th e fa ciliti e s th a t it o ffe rs f or sh o pp in g A .

d ep a rt m ent st o r e is e ss enti a lly a sh o pp in g institu ti o n .

I t is a stro n g fa ct o r in th e tra d e in w o m e n s w ea rin g’

a pp ar e l , f or inst a n ce ; b u t a s a r u l e t h e d ep a rt m e nt st o r e

h as fn o t b ee n a bl e t o m a k e a s u cce ss o f a gr o ce ry d ep a rt
m ent . I t canno t o p e ra t e a gr o ce ry d ep art m ent o r d i
n arily a s ch eap ly a s a u nit st or e is o p er a t e d . T h e bu y
in g h abits o f th e co nsu m ers , f u rth er m o r e , l ea d th em t o
p a tr o ni z e u ni t st o r e s f or th e b u lk o f th e ir pur ch as e s o f
gr o ceri es .

T h e d et er m i n ati o n O f th e b u yin g m o tiv es an d h abits

o f c o ns u m ers t o wh o m a g iv e n ar ti cl e is t o b e s o l d ,

th erefo r e, p l ays a n im p o rt a nt p a rt in th e d ecisi o n o f

a m a nuf a ct u r e r a s t o wh e th er h e will s ee k t o h a v e hi s

p r o du ct s o l d t h r o u gh u nit st o r es o r thr ou gh d ep a rt m e nt
st o r es .

A ch a in st or e syst em is a gr ou p o f s ca tt er e d st o r e s
with sin gle o w n ershi p a n d ce ntr aliz e d m a n agem e nt .

O r d in arily a ce ntr a l w ar e h ou s e is o p er a t ed fr o m whi ch

m er ch an d is e is d istrib u t e d t o th e r e t a il br a n ch e s . T he
ch a in st or e syst em h a s th e a d va nt a e s O f l a r e s ca l e
g g
b u yi n g a n d wi d e d is p ersa l o f th e in di vi d u a l r e t a il
bra n ch es I t h a s f acilit a t ed th e d ev el op m e nt o f st an d
.

ar d iz atio n o f e qu i pm e nt a n d st a n d ar d iz a ti o n o f m e th o d s
 MARKE TIN G M E TH ODS 9

of ope a r ti o n an d m a n agem ent A lth ou gh th er e are .

s ev er a l n o t e wo rthy e x cep ti o ns as in t h e eas e O f a few

,

ch a ins O f d ep a rt m e nt st o r e s ch a in st o r e s as a ge n e r a l
,

rul e h a v e b ee n m o st s u ccessfu l in m ark e tin g th o s e

p r o d u cts th a t o r d in a r ily ar e s o l d thr o u gh u nit st o r e s .

C h a in st o r e s ar e l o ca t e d at p o ints wh e r e it is m o st
co nv e ni e nt f or th e ir p a tr o ns t o visit th e m .

Wh il e th e c h ain st o r e syst e m u n d ou bt e dl y h as
,

d e finit e a d va nt a ge s s u ch as h a v e b ee n m e nti o n ed it ,

a ls o is a t a d is a d v a nt a ge in s om e r e s p e cts in c o m p e ti

ti o n wi th u nit st o r es T h e ch a in st o r e syst em is l ess

.

fl exibl e I t ca nn o t r ea d ily a d j u st its s ervi ce s s u ch as

.
,

d eliv ery an d cr e di t t o m ee t t h e n ee d s o f th e in d ivi d u a l

,

p atr o ns .M o r eo v e r th e a d va nt a ges th a t th e ch a in
,

st o re syst em ga ins thr ou gh ce ntra liz ed b u yin g a n d

st an da r d iz a ti o n o f m an a ge m e nt m e th o d s a r e o ffs e t in ,

p a rt a t l ea st by t h e,
n e c e ssity o f o p e r a tin g a ce ntr a l

wa r eh ou s e an d e s p eci a lly by th e d iffi cu lty i n s ecu rin g

m a n a gers wh o wi ll t ak e a k ee n p ers o n a l int er est in th e
co n du ct o f th e s e st o r e s E x p ens e s m u st a ls o b e
.

in cu rr e d for s u p e rvisi o n a n d fo r p o li cin g th e br an ch es ;

a syst em o f fr e q u e nt c l o s e ins p ec ti o n is n ecess a ry in
,

a ch a in st o r e syst em .

I n as m u ch as m a ny O f th e ch a in st o r e syst em s h av e
cu t p r i ce s th ey ar e l o o k ed a t ask a n ce by n u m er o u s
,

m a nu f act u r ers wh o b e li e ve th a t th e ir m a in r eli a n ce

m u st b e p l a ced u p o n u nit st o r e s T h e fri cti o n b e tw e e n
.

ch a in st o r e s a n d u nit st o r e s h a s b ee n a m a tt e r o f gr a v e

co n ce rn t o m a ny a m a n u f a ct u r e r d u rin g th e l ast t e n o r

fif t ee n yea rs .

O cca si o n a lly a m a n u fact u r e r d e ci d e s th a t a syst em

o f m a n u fa ct ur e r s r e t a il br a n ch e s is th e l o gi ca l o u tl e t
’

f o r a t l ea st a p a rt o f his m er ch an d is e T h e e st a blish
.

m e nt o f r e t a il br a n ch e s by a m a nu fa ct u r e r is n o t o r d i
na r ily h o w e v e r f o r th e p u rp o s e o f e co n o m y in m ar
, ,

k e tin g le xp en s e I t s eem s t o h a v e b ee n t h e ge n er al
.

e xp eri e n ce o f m a n u f a ct ur e rs w h o h a v e e st a blish ed
r e t ail bra n ch es th a t th ey a r e n o t a bl e to o p e r a t e th eir
st o r es m or e e co n om i ca lly th a n th e a v e r a ge u ni t st o r e
o r d ep a rt m e nt st o r e is o p er a t e d Su ch br a n ch es ge n
.

era lly h a v e b ee n e st ablish e d fo r o th er r eas o ns On e O f .

10 MARK E TIN G PROBLE M S
th es e reas o ns is t o ins u r e a st ea d y s u r e o u tl e t for a t ,
’
l east a po rt i o n o f th e m a n u fa ct u re r s p ro d u ct Th er e .

a r e a ls o s e v e ra l inst a n ce s in whi c h m a n u fa c t ur e rs h a v e

e st a b lish e d a s m a ll n u m b e r o f r e t a il br a n ch e s f or e d u

c a t io n a l a n d p r o m o ti o n a l w o rk T h e L E Wa t e r . . .

m a n C o m p a ny fo r e x a m p l e h as a st o r e in N e w Y o rk
, ,

to p r o vi d e s ervi ce t o th e p u r ch a s e rs O f its p e ns a n d
a ls o t o s e rv e as a l a b o r a t o ry in whi ch t o st u d y r e t a il

p ro bl e m s
*
. T h e D e nnis o n M a nu f actu rin g C o m p a ny
h as f ou r r et ail br a n ch e s th a t a r e u s ed a s a ge n ci e s f or
p r o m o tin g t h e s a l e o f its p r o d u c ts b u t n o t in c o m p e ti

ti o n with th e in d e p e n d e nt r e t a il st o r e s th at ca rry this

m e r ch a n d is e Wh e n e v e r a m a nu f a ct u re r d e ci d e s t o
.

o p e n u p a r e t a il st o r e h e fin d s i m m e d i a t e ly th a t his
,

a cti o n is ca p it a liz ed by his c o m p e tit o rs w h o s ee k t o

d e v e l o p a s p irit o f a nt a go nis m a m o n g r et a il e rs o n th e
gr ou n d th a t th e m a nu fa ct u r e r is e nt e rin g int o dir e c t
c o m p e titi o n with his o w n cu st o m e rs .

A m ail o r d e r h o u s e o r di n a rily is a b u sin e ss th a t s e lls

a t r et ail fr o m ca t a l o gu e s a n d n o t o v er t h e c o u nt e r .

T h e o r de rs ar e r ece iv e d by m a il a t a ce ntr a l w a r e h o u s e
wh e n ce th e go o d s ar e shi pp ed t o co nsu m ers T h e .

ch i e f fi e l d f o r t h e d e v e l o p m e nt o f m a il o r d e r s a l e s h a s

b ee n i n t h e r u ra l d istri c ts a n d s m all t o wn s T h e ca t a .

lo gu e o f a m a il o r d e r h ou s e give s a n O p p o rt u nity f or
sh opp in g s o m e wh a t ak in t o th e visit t o a d ep art m e nt
st o re T h e l a r ge m ail o r d e r h ou s e s t o b e s u r e h a v e
.
, ,

u tiliz e d th e ir b u yin g p o w e r a n d th e ir e st a blish e d cli en

t e l e t o s e ll m a ny p r o d u cts ou tsi d e th e r a n ge o f sh opp in g

go o d s . Wh eth e r a m a il o r d e r h o u s e is abl e t o o p e ra t e
a t s u bst a nti a lly l o w e r e x p e ns e th a n u nit st o r e s is a

q u e sti o n th a t h as n o t yet b e e n d e finit e ly s e ttl e d A t .

a ll e v e nts c o n ce ntr a ti o n o f b u yin g p o w e r a n d th e t e n d

,

e n cy t o cu t p ri ce s fr e q u e ntly h a v e c a u s e d m a n u fa c

tu r er s t o h e sit a t e t o s ee k d istrib u ti o n o f th e ir p r o du cts

thro u gh m a il o r d e r h o u s e s .

C oo p era tiv e st o r e s h a v e n o t b ee n s u ffici e ntly su c

ces s fu l in t h e Unit e d St a t e s u p t o t h e p r e s e nt ti m e t o
, ,

p r e s e nt a s u bst a nti a l m ar k e tin g p r o bl e m A c o o p er a .

Jo h n Allen M ur ph y L E Wa te r m an C o m pa n y s Lab o r at o ry
f “ ’
,
. .
,

R e t ai l St o r es P ri n te r s I k Se p t e m be r 7 1 9 1 6 p p 3 4
,
” ’
n , , ,
.
— .
 MARK E TIN G M E TH OD S 11

tiv e st o r e p r o p erly s p ea ki n g is o n e th a t is o wn e d a n d
, ,

m a n a ge d by c o ns u m ers T h e typ i ca l co o p er a tiv e st o r e

.

is o r ga ni z ed o n t h e R o ch d a l e p l a n wh er eby e a ch m em
b er o f th e s o ci ety p u r ch a s es o n e o r m o r e sh ar es o f st o c k
a t a s m a ll a m ou nt p er sh a r e T h e n u m b e r o f sh ar es
.

th a t o n e m em b e r m ay h o l d u su all y is lim i t e d a n d o r d i
,

n arily ea ch m em b e r h as o n e v o t e irr e s p ectiv e o f t h e

n u m b er o f sh a r es o f st o ck th at h e h o l d s D ivi d e n d s
.

c o m m o nly a r e p a i d u p o n t h e st o ck a t th e o r d in ar y

l o cal r at e o f int er est a n d th e r em ain d e r o f th e earn

in gs a si d e fr o m s u ch a s m a y b e s e t a si de for r es e rv e s
,

o r s u rp l u s is d istrib u t e d t o th e m em b e rs a nn u a lly in
,

p r o p o rti o n t o th e ir p ur ch as e s T hi s syst em h as ha d
.

a tr e m e n d o u s d e v e l o p m e nt in E u r o p ea n coun tri es b u t ,

in th e Unit ed St a t es th e n u m b e r o f co op era tiv e st o r e s

is s m all a n d m any o f th o s e in e x ist e n ce h a v e led a pr e
ca ri ou s lif e . D ur in g th e l a st e i ght ee n m o nths t h e ,

co o p er a tiv e m o v e m e nt h a s r ece iv ed a n ew im p e t u s in

this cou ntry thr o u gh th e infl u en ce o f l a b o r u ni o n m en ;

thi s m ay p r o v e t o b e a n ew m ark e tin g fact o r o f l a r ge
si gni fi ca n ce .

R e t a il p u b li c m ark e ts p r es ent p r o bl ems o f q u it e a

d iff erent ch a ra ct er fro m th o s e e n co u nt ere d in o th e r
typ es o f r e t a il st or e s M u ni ci p a l m ar k e ts in whi ch
.

b o oths ar e l eas e d t o d ea l e rs to b e s u r e ar e n o t fa r
, ,

d i ff er e nt fr o m o th er cl ass es o f r e t ail st o r e s P u b li c
.

m a rk e ts in whi ch p r o du ce rs s ell t o c o nsu m ers h o we ve r , ,

brin g in a n ew s et O f p r o bl em s .

Wi d esp re ad e ff o rts h a ve b ee n p u t f o rth e s peci a lly

,

d ur in g r e ce nt y ears in n u m e r ou s l o ca liti es t o s tim u

, ,

l at e th e d ev el o p m e nt o f pu b li c m a rk ets O f thi s typ e .

Th eir s u ccess d ep en d s u p o n th e b u yin g h a bits o f th e

co nsu m ers a n d th eir r ea d in ess t o go t o th e s e m a rk e ts .

Th eir s u ccess als o d ep en d s u po n th e r ea d in ess o f th e

farm ers t o s p en d th e ti m e n e cess a ry t o h au l th eir
p r o du ce t o m a rk e t a n d t o ca rry o n its s al e . Fr e q u e ntly
farm ers fin d th a t this t a k e s t oo m u ch o f th e ir ti m e a t
a p e ri od wh e n th e ir cr o p s n ee d a tt e nti o n I n th e
.

l ar ge r c iti es m o r eo v er th e s u p p ly o f p r o du ce fr om
, ,

n earby s ou r ces is s o in a d e qu at e fo r th e t o t a l n eed s O f

t h e c o m m u nity th a t l a r ge q u a ntiti e s m u st b e s h i p pe d
12 MARK E TI N G PROBL E M S
in fro m m o re or l ess d ist a nt p o ints Un d er s u ch cir .

cu m s t a n ces m e r ch a nts a r e e ss e nti a l f or ca rry in g o n t h e

p r o d u ce b u sin e ss . I t m ay b e t o th e a d va nt a ge th er e ,

fo r e n o t o nly o f th e fa r m ers b u t o f th e c o m m u nity a t

,

l a r ge u n d e r s o m e c o n d iti o ns t o h a v e th e b u lk o f th e
l o ca l p r o d u ce s o l d thr o u gh e st a blish ed tr a d e ch a nn els
’
ra th er th a n t hr ou gh f a rm ers p u bli c m ark ets .

Wa go n r e t a il ers in cl u d e th o s e m er ch a nts w h o d o
n o t o p e r a t e a r e t a il st o r e e x cep t p e rh a p s as a n in ci
,

d e nt a l a d j u n ct t o th e ir b u sin ess b u t wh o r e t a il m er
,

ch a n d is e fr o m w a go ns th a t d e liv e r t h e m e r ch a n d is e a t

th e h o m e s o f th e co ns u m ers T h e m ilk tr a d e is o n e o f
.

th e n o t a bl e e x am p l e s o f b u sin ess th a t is ca rri e d o n by

wago n r e t ail ers Su gge sti o ns s u ch as h a v e b ee n m a d e
.
,

fro m tim e to ti m e th a t a co o p e r a tiv e syst em S h ou l d b e

,

u s e d f o r mi lk d e liv e ry ru n a f o u l o f this f a ct
,
th at th e—

o nly p l a ce O f b u sin e ss f o r t h e o r d in a ry m ilk d ea l e r is

his d eli v ery w a go n I f h e giv es u p his in dep e n d e nt

.

d e liv ery syst em h e p ra cti ca lly giv es u p th e in d ivi dua lity

,

O f his b u sin e ss .

T h e ice b u sin e ss is a n o th e r tr a d e ca rri e d o n by

wa go n r e t a ilers I n this tra d e th e h ea vy l o ss thr ou gh
.

shr ink age t e n d s t o d is cour a ge d u p li ca ti o n o f r o u t es a n d

th e r efo r e t o r es u lt in th e d e v e l o p m e nt o f l o ca l m o n op o
li es in th e ice tra d e A s in th e ca s e o f th e m i lk d ea l er
.
,

th e i ce m e r ch a nt o r d in a rily m u st m a int a in a d eliv ery

syst em if h e is t o ca rry o n a n in d ep e n d e nt b u sin ess .

B o th m ilk a n d ice ar e co m m o d iti e s O f s u ch ge n era l u s e

th a t th es e tr a d es p r e se nt u nu su a l m a rk e tin g p r o bl em s
o f br o a d p u b li c p o li cy M a ny o f th es e p ro bl em s h av e
.

n o t ye t b ee n s o lv e d s a tisfa ct o rily .

T h e fin a l c l a ss o f r e t a il m e r ch a nts in cl u d e s wh at
m ay b e t e rm e d b u lk r e t a il ers E x am p l es o f this cl a ss
.

ar e co a l m e r ch a nts a n d l u m b e r r e t a il ers I n th es e
.

trad e s a m er ch a nt n e cess a rily m u st carry a l ar ge st o ck

r e qu irin g a h ea vy inv e st m e nt o f cap it al T h e tra d e is
s eas o n a l a n d s a l e s u su a lly ar e m ad e in b u lk l o ts o n
s p ecifi ca ti o n T h e in d ivi du a l co nsu m e r s e l do m visits
.

th e p l a ce o f b u sin ess o f th e r e t a il e r .

E ach o f th es e typ es o f r e t a il m er ch a nts pr es e nts

specia l p r obl ems in st o r e m a n agem e nt a n d a ls o s p ecia l
 MA RK E TIN G M E TH OD S 13

p r o bl e m s fr o m t h e st a n d p o int O f t h e m a n u fa c t u r e r o r

p r o d u ce r w h o u n d e r t a k e s t o d e t e r mi n e t h e l o g i ca l
ch a nn e ls f o r th e d istrib u ti o n o f hi s p r o d u ct T he .

s el e cti o n O f th e r e t a il ch a nn els t o b e u s ed m o r eo v e r
, ,

infl u e n ces th e p r o d u cer s d e cisi o n a s t o th e m eth o d o f

’

wh o l es al e d istrib u ti o n t o b e u tili z e d .

Wholes a le Tr a de

A wh o l es al e m er ch a nt is a b u sin ess m a n wh o b u ys
a n d s e lls m er ch a n dis e o n hi s o w n a cco u nt f o r d is t r ib u

ti o n to r et a il e rs in l o ts s m a ll e r th a n th o s e in whi ch th e
wh o l e sa l er b u ys T h e wh o l e s al e m er ch a nt is a l ar ge
.

fact o r in th e d istrib u ti o n o f m a ny p r o d u cts t o u ni t

st or e s Al th ou gh th e r e a r e s om e m a n u fa ct u r ers wh o
.

s e ll th e ir m er ch a n d is e d ir e ct to re t a il gr o cers f o r ,

ex a m p l e n e v erth e l ess th e y co nstit u t e b u t a s m a ll

,

m in o rity Su ch m a n u fact ur ers f u rth er m o r e fin d it

.
, ,

n e ce ss ary p ra cti ca lly t o d u p li ca t e th e o rgani z a ti o n

a n d t o a ss u m e th e f u n c ti o ns o f t h e wh o l es a l e gr o ce r ,

u s u a lly in cu rrin g a t l ea st as m u ch e x p e ns e as th e

wh o l es al e gr o ce r in cu rs in op er atin g hi s b u sin ess .

T h e f u n cti o n o f th e wh o l e s a l e r o r d in a rily is t o
a ss e m bl e th e p r o d u cts o f n u m e r o u s m a n u f a ct u r e rs a n d

t o p ar ce l th es e o u t in s u ch l o ts as ar e r e q u ir e d by u nit
st or es T h e wh o l es al e m er ch a nt a ls o p erf o rms th e
.

fu n ctio n O f m aki n g co ll e cti o ns a n d b e ars t h e cr e d it risk .

This is n o t a s m a ll it em in m a ny wh ol e s a l e b u sin e ss e s .

Th e l a r ge wh o l es al e m er ch a nt O ft e nti m e s goe s f u rth e r

th a n this He assu m e s th e r e sp o nsibility o f s p ecifyin g
.

wh at p r o d u ct is t o b e m a d e an d h e a ls o m a y t a k e th e
r e sp o nsibility o f h a vin g th e p r o d u ct p u t o u t u n d e r his
o wn bra n d or tr a d e m a rk th u s e nt e rin g int o co m p e ti
-
,
’
ti o n wi th th e bra n d s o f go o ds carryin g m a n uf a ct u r ers
tra d e m arks
-
.

Fr e qu e ntly l oo s e t a lk is h ear d a b ou t th e e l im in a
”
ti o n o f th e j obb er This is n o t h o w e ve r a q u e sti o n
.
, ,

th a t can b e d is cu ss e d o n th e b asis o f gen e ra liz a ti o n

with ou t r e fer e n ce t o th e fu n cti o ns p erfo rm e d E a ch .

p arti cu l ar c as e n ee d s t o b e c o nsi d er e d by its e lf o n its

o wn m erits Ta k e a sh o e m a nu fa ct u r e r n ear B o st o n
.
,

He is s elli n g his e ntir e o u t pu t o f w o m e n s

’
for e xam p l e .
14 MARK E TIN G PR O BL E M S
sh o es tosixty sh o e wh o l esa l ers O n e s a l es m a n with.
,

th e o cca si o n a l a ssist a n ce o f o n e m e m b e r O f th e fir m ,

is a bl e t o s e ll t h e e ntir e o u t p u t O f t h e fa ct o ry T h e .

cu st o m e rs a r e a ll o f s ou n d fin a n ci a l st a n d in g T he .

m a n u fa ct u r e r th er e fo r e in cu rs sli ght cr e d it risk

, ,
H is .

shi p m e nts a r e m a d e in l ar ge l o ts C o ns eq u e ntly h e .

c a n o p e r a t e with a m ini m u m shi p p i n g f o r ce a n d a

m ini m u m O ffi ce f o r ce He a ls o r e ce iv es v a l u abl e gu i d

.

a n ce fr o m his cu st o m ers in t h e s e l e c ti o n o f styl es In .

this cas e t h e m a nu fa ct u r er b eli e ves th a t it is t o his

,

a d va nt a ge to d is p o s e o f his p ro du ct t o wh o l e s a l ers .

He fin d s th a t in this w ay h e can co m p et e e ffectiv ely

with o th er sh o e m a nu fa ct u re rs wh o h av e fo ll o we d a
p o li cy o f s e llin g th e ir sh o e s d ir e ctly to r e t a il e rs .

O n e o f th e l ar gest m a n u fact u re rs O f h o si ery in th e

Unit ed St a t e s h as fo llo w e d a p o li cy o f co n ce ntra tin g his
e ff o rts u p o n th e p r o bl e m s O f p r o d u cti o n He s e lls his .

e ntir e o u t p u t t o wh o l e s a l e rs M a ny fr u it a n d v e ge
.

t abl e ca nners wh o s e b u sine ss is h i ghly s ea s o n al co u l d

, ,

n o t a ffo r d t o o p e r a t e th e ir p l a nts if it w e r e n o t f o r th e
,

a ss u re d o u tl e ts a n d t h e fin a n ci a l a ssist a n ce f ur nish e d

th e m by wh o l es a l e gr ocers .

T h e s p e ci a lty wh o l e sa l e r r ep r ese nts a d i ff e r e nti a ti o n

from th e o rd in ary wholes al e m er ch a nts su ch as ar e ,

r e fe rr ed to ab o v e I n N ew Y o rk f or e x am p l e th er e
.
, ,

a r e a n u m b er o f wh o l e s a l ers w h o h a n d l e o nly h o si ery

a n d knit goo d s T h e t ea a n d co ff ee wh o l es a l er is
.

a n o th e r s p e ci a lty m er ch a nt Th es e s p eci a lty wh o l e

.

s a l ers ge n er a lly co ve r a wi d e t errit ory in th e s al e o f

th e ir p r o d u cts a n d d e ve l o p a d em an d thr ou gh es p eci al
ca r e in th e s e l e cti o n a n d q u a lity o f t h e m er ch a n dis e

th a t th e y h a n dl e .

Th ere a re a few cat a l o gu e wh o l es al ers in th e U n it e d

St at e s . O n e o f th e m o st n o t abl e ex am p l e s o f th es e is
B u tl er B ro th e rs o f C hi ca go T h e cat al o gu e wh o l e .

s al er d o es n o t e m p lo y a f o r ce o f tra v ellin g s al e sm e n
b u t s e lls o n m ail o r d ers .

’
M er ch a nts co op era tiv e wh ol es al e ass o ci ati o ns o r ,

b u yi n g e x ch an ge s a s th ey ar e s om etim e s call e d h av e ,

b ee n d ev e l o p in g m o r e r ap i d ly d u rin g t h e l a st t e n y ears
th a n pri o r t o th a t tim e T h e o l d est o f th em h a v e b ee n
.
 MARK E TIN G M E TH ODS 15

in ex ist e n ce for tw e nty fiv e yea rs o r m o re Th es e

-
.

coope ra tiv e b u yin g ass o ci a ti o ns ha v e h a d th e ir gr e at est

d e v e l opm e nt in th o s e tr ad e s i n whi ch th e wh o l esa l e
m er cha nt is a la r ge f act o r Th e y a r e d ir e c t co m p e ti
.

t o rs O f th e wh o l es a l e m er ch a nt b u t in th e gr o cery tr a d e
,

a t l east th e coo p e r a tiv e b u yin g ass oc i a ti o ns d ea l ch i efly

in st ap le m e r ch a n d ise .

T h e m ost s u ccessfu l typ e O f coo per a tiv e b u yin g

as s o ci a ti o n is o r ga ni z ed o n p l a ns si m il a r t o t h e R o ch
dal e syst em O f co nsu m e rs coo p er a tiv e s o ci e ti es wh er eby
’
,

ea ch m e r ch a nt , wh o is a m em b e r h as o n e v o t e a n d ,

wh er e th e am o u nt o f st o ck th a t o n e m e r ch ant can h o l d
is lim i t ed Th es e c o operativ e b u yin g a ss o ci ati o ns d o
.

n o t e m p l o y tr a v e lin g s a l e s m e n Th e y s e ll o nly for

.

cash or o n v e ry sh o rt c r e dit a n d u s u a lly th e cu st o m e rs

p ay fo r th e d e liv ery o f th e go o d s th a t th ey o r de r .

Th er e ar e fre qu e nt inst ances o f ass oc iatio ns o rga ni z e d

o n o th e r p rin ci p l e s ,a n d s o m e tim e s it is st a t e d th a t
s om e O f th em h a v e b ee n p rom o t e d by pa rti es wh o w e re
int er est ed in s e cu rin g th e co mmissio n o n th e s al e o f
the s t o ck r ath e r th a n in th e co ntin u e d s u ccessfu l ,

o p er a ti o n o f t h e b u sin e ss As in o th e r cooperativ e
.

e nt e rp ris e s t h e s u ccess o f th e co op e r ativ e b u yin g ass o

ciatio n d ep e n d s u p o n th e willin gn ess O f th e m em b e rs o f

th e a ss o ci a ti o n to w o rk t o geth e r h arm o ni ou sly an d t o

em p l o y s u ffic i e ntly e x p e rt m a n a ge rs T h e m o st su c
.

c es s fu l co o p er a tiv e b u yin g a ss o ci a ti o ns ar e m a d e u p

O f r e t ail m e r c h a nts wh o a r e in a s u ffi ci e ntly str o n g

fina n ci al p o siti o n to e n able th em t o p ay c ash for th e ir

pur ch as es .

T h e fru it a n d pr o du ce tra de p r es ents a s eri e s o f

p a rti cu l arly co m p l ex m ark e tin g p r o bl em s Th es e p r o b .

l em s n e v erth e l e ss ar e o f wi d e p u b lic int er est Th e y

, ,
.

ar e c o n cern e d p rim a rily with th e l a rge ur b a n m a rk e ts .

T h e inh abita nts o f th e l a rge citi e s a n d th e in d u stri a l

d istri c ts o f th e Unit ed St a t e s ar e s u pp li ed with fr esh
fr u its a n d v ege t a bl e s fro m a wi d e a r ea T h e l o ca l .

s u pp li es in m o st inst a n ces a r e n o t ad eq u a t e t o pr o
, ,

vi d e d u ri n g th e e nt ir e y ea r fo r th e n eed s o f th e pe op le
,

livin g in th es e d istri cts With th e i m p r o v em e nt in

.

m ea ns o f r e frigera ti o n a n d tr a ns p o rt a ti o n f u rth erm o r e , ,

16 MARK E TIN G PROB LE M S

p r o d u c ers in d ist a nt p a rts o f t h e co u ntry h av e f o u n d

th a t th ey can ca t e r a d va nt ageo u sly to th es e m ark e ts ,

e v e n t o t h e e xt e nt o f e n ga gin g in s p e ci a liz ed a gr i cu lt u r a l

p r o d u c ti o n As
.
ye t t h e m a rk e tin g m ac hin e ry f or

h a n d lin g this l ar ge v o l u m e o f tra d e is by n o m ea ns

rf e c t T h e tr a d e is o n e o f e s p eci a l diffi cu lti e s b e cau s e
p e .

o f th e fact th a t a c o nst a nt r e gu l a r flo w o f m e r ch a n d is e
,

is e ss e nti a l a n d a ls o b e ca u s e o f th e p erish abl e n at u r e o f

th e m e r ch a n d is e whi ch inv o lv es d anger O f l oss thr o u gh
,

s p o ilage o r thro u gh gl u tt ed m a rk e ts .

Th e c o m m issi o n m er ch a nt is o n e o f the chi ef a ge n

c i e s f or th e h a n d lin g o f fru it a n d p r o d u ce in l a rge c iti e s .

O r d in a rily th e co m m i ssi o n m e r ch a nt r e ce iv e s shi p m e nts

o n c o nsi gnm e nt fr o m f a rm e rs o r fr o m cou ntry d ea l ers .

Th es e S hip m ents ar e s o l d at th e p ri ce s th a t ar e cur r e nt

wh e n th e shipm e nts a rriv e Aft er d e d u ctin g hi s c om
.

m issi o n f ee a n d an y in ci d ent a l ex p ens e th a t h e m ay

h av e in cu rr ed th e c omm issi o n m er ch a nt r emi ts th e
,

b a l a n ce t o th e shi pp er This syst em e n abl e s th e

.

ship p er t o ship his m er ch a n d is e wh en ev e r it is r ea d y

with o u t awa iting sp e cifi c o r d ers fr om th e co mmi ssi o n
m er ch a nt I t a ls o e n abl e s th e shipp e r t o o bt a in th e
.

b en e fit o f th e p ri ces th a t ar e cu rre nt a t th e tim e th a t

th e shi pm e nts a rriv e at th e m a rk e t D issa tisfa cti o n
.

s o m e tim es o ccu rs wh e n th e shi pp er d o es n o t r ece iv e a s

,

hi gh a p ri ce a s h e a nti ci pa t e d This m ay b e d u e t o
.

p o o r gra d in g t o p oo r h a n d lin g in transit or t o a n

, ,

u n e x p ect e d sl u m p in t h e m a rk e t T h e c omm issi o n

.

m er ch a nt n o t infr e q u e ntly is h e l d r esp o nsibl e by th e

shi pp er fo r th e fa ilur e t o o bt a in b ett er p ri ces .

M any co mm issi o n m er ch ants fur th e rm or e b u y a n d

, ,

s e ll o n th e ir o wn a ccou nt th u s a ctin g a s j o bb ers This

,
.

co m bin a ti o n o f a c o mm issi o n m e r ch ant a n d a j o bbin g

b u sin ess whi l e it h a s s om e a d va nt a ges o cca si o n a lly

,

e v e n t o th e shi pp er h a s n o t o r d in a rily w o rk e d o u t w e ll
,

in o th er in du stri es in th e l o n g r u n T h e co n fli cts o f .

int er est t en d t o cr eat e d istru st an d d issat isfacti o n .

I n th e l a rge u rb a n m ark e ts th e r e a r e s ev era l o th er

a ge n ci e s thr ou gh whi ch p r o d u ce m ay b e s o l d Th er e .

ar e car lo t r e ce iv e rs wh o b u y ou tri ght o n th e ir o wn

-

accou nt . Som e o f th es e r ece iv ers an d als o s om e o f ,

 MARK E TIN G M E TH ODS 17

th e o th er typ e s o f m i d d l em en s e n d o u t b u y ers t o ,

p u r ch a s e p r o d u ce o r t o co ntr a ct f or it in t h e gr o win g
d istri cts .

T h e br o k e r wh o h an d l e s a p o rt i o n o f th e tr a de i n
,
'

p r o d u ce , s e ll s f or a br o k er age fe e shi p m e nts c o nsi gn e d

t o h im .O r d in arily th e br o k er h o w e v e r s e lls o nly , ,

u p o n c o nfirm a ti o n o f t h e p ri ce by th e S hi pp er T he .

bro k er a s a r u l e d eals o nly in car l o ts

, ,
-
.

T h e j o bb e r in th e fr u it an d p r o d u ce tr a d e b u ys
fr o m car lot r e ce iv ers br o k ers o r com m i ssi o n m er
-
, ,

ch a nts an d s ells t o r e t a il e rs He p erf o rm s th e r egu la r

.

’
wh o l e s al e m er ch ant s f u n cti o ns .

T h e tr a d e in c itru s fr u its a n d o ccasi o n a lly in o th er

p r o d u cts in s e v er a l l a r ge c iti e s is ca rri e d o n thr o u gh
au cti o ns Th e s e au ctio ns a r e o r di n arily h el d d a ily
.
,

a n d s a l e s ar e m a d e d ir e ctly a t t h e fr e i ght t e r m i n a l t o

j obb e rs a n d l ar ge r e t a il e rs T h e au cti o n syst e m c an

.

b e u s ed ad v a nt ageo u sly o nly wh er e th er e ar e l ar ge ,

r egu l a r ship m ents o f c a r e fu lly grad e d p r o du ce .

T h e m o st s eri ou s p r o bl em in th e tr a d e in fr u it a n d
p e rish a bl e p r o d u ce in o u r l a r ge c iti e s is th e la c k o f
a d e qu a t e t e r m in a l f a ciliti e s f o r h a n d lin g t h e tr a d e

e x p e d iti o u sly a n d e co n o m i cally I n N ew Y o rk C h i

.
,

c a go , a n d B o st o n t h e wh o l e s ale fr u it a n d p r o d u ce

m ark ets ar e p r a cti ca lly in th e s a m e co n d iti o n th a t th e y

w er e tw e nty t o thi r t y y ears a go T h e v o l u m e o f th e .

tra d e h as greatly in cr e as ed ; yet th es e m ark e ts a r e n o t

w e ll sit u at e d with r ef er e n ce t o shi pp in g t e r m i n a ls .

T h e r es u lt is e x p ensiv e t ea m in g thr o u gh c o n ge st e d
streets ; this fr e q u e ntly c au s e s s e ri ou s d e t e ri o r ati o n in
th e p r o d u ce Wh il e th es e e xistin g m ark ets m a y gen
.

e r a lly b e w e ll sit u a t e d f o r th e j o bbin g tr a d e n e v er th e ,

l ess th e y ar e n o t s a tisf a ct o rily e qu i p p e d fo r h a n d lin g

car lo t shi p m e nts
-
T h e p r o visi o ns o f a d e q u a t e r a il
.

r oa d t er m in a l faciliti e s e s p e ci ally e q u i ppe d f or this

tra d e is o ne o f th e m o st u r ge nt m ark e tin g p r obl ems t o
b e f a ced .

A n o t abl e d e ve l o p m ent in th e fi el d o f M ark e tin g

d u rin g r e ce nt y ea rs h as b ee n t h e gr o wth o f th e C a li
for n ia Fr u it G r o w ers E x ch a n ge p r o b ably th e m o st
’
,

s u c cessfu l e x am p l e o f a coo p er ativ e a ss o ci a ti o n o f

18 MARK E TIN G PR O BL E M S

p r o d u c e rs T h.e s u c ce ss o f this o rga niz a ti o n h as

u n d o u bt e d ly b e e n d u e in p a rt t o s p e ci a l c ir cu m

st a n ce s s u ch as th e s p ec i a liz e d c ap it a listi c n at u r e of
, ,

t h e in d u stry a n all th e year r o u n d p r o d u cti o n a n d

,
- - -
,

p r e vi o u s e x p e ri e n ce in c oo p er ative e ff o rts fo r o th er
p pu r o s e s N.o t l e a st a m o n g ,
o th e r r ea s o ns is t h e d is ,

t an ce fr o m th e m ark e t whi ch h as p l a ce d a p r em i u m
,

u p o n t h e e ff e ctiv e co ntr o l o f shi p m e nts with di v e rsi o n ,

in tra nsit in o r d er to h av e th e fru it d e livere d a t m ar

k ets paying th e b est p ri ce s a n d to a v o i d w ast efu l gl u ts .

Th ere a r e a ls o n u m e r o u s o th er e x a m p l es o f s u c
cess fu l co o p era tiv e m a rk e tin g a ss o ci ati o ns o f p r o
d u cer s *
. While coop e ra tiv e m eth o d s a r e far fr o m
b eing a cu r e-a ll f or t h e ills th a t e xist in t h e m ark e tin g o f
farm p ro d u ce n e v erth e l ess th ey a r e a chi evin g e n ou gh
,

s u ccess to wa rra nt a th or ou gh go in g st u d y o f th e p r ob -

l em s o f th e ir o r ga ni z ati o n a n d m a nagem e nt fr o m the

b u sine ss st a n dp o int .

T h e fin a l t op i c in this s ec ti o n o n wh o l e sa l e tr a de
’
d ea ls with m a n u fa ct u r ers wh o l es a l e bran ch es N u m er .

ou s m a n u fa ct ur ers h a v e e st a b lish e d wh o l e s a l e br a n ch es

fo r th e d istrib u ti o n o f th e ir p r o d u cts dir ectly t o r e t a il

er s . Thu s th e y h a v e a ssu m ed c om p l e t e ly th e fu n c
ti o ns a n d th e e xp ens e s o f th e wh o l es a l e m er ch a nt I n .

few ca s e s d o es it app ear th a t th e r e h a s b ee n a s u b

s t a n tia l s a vin g in e x p e ns e by th e a d o p ti o n o f this

p o li cy . T h e O bj e cts ge n era lly h a v e b ee n t o f a cili t a t e

m o re a ggr essiv e s e llin g or t o m ee t s om e s p e ci al

c o n d iti o ns in t h e in d u stry .

Fr e q u e ntly a m a n u fact u r e r fe e ls th a t hi s p r o d u c t
d o e s n o t r ece iv e e n ou gh in d ivi d u a l a tt enti o n fr o m
wh o l es a l ers a n d th e ir s a l e sm en He b eli e v es th a t by .

co m i n g dir ectly in c o nt a ct with r e t a il ers h e will b e ,

a bl e t o p u sh hi s go o d s m o r e e ff e ctiv e ly a ga inst t h e

p r o d u cts o f his c om p e tit o rs He v a lu es th e go od will

.
-

o f th e r e t a il m e r ch a nts a n d b e li e v e s th a t h e ca n s ecu r e

it m o r e c ert a inly by d ea ling with th em d ir ectly I n .

o th e r inst a n ce s t h e m a n u fa ct u r er e st ablish e s a syst em

,

o f wh o l es a l e br a n ch e s in o r d e r t o m a in t a in a m or e

st ea d y p r o du cti o n l oa d fo r his fa ct o ry ; with a syst em

*
See a nn u al r eports of St at e Mar k e t Dir ecto r of C aliforni a .
 M AR KE TIN G M E TH O D S 19

Of wh o l es a l e br a n ch e s th e s eas o n al fl u ct u ati o ns in th e
v o l um e o f s a l e s m ay b e l ess e n e d .

Am o n g th e in d u stri e s in whi ch th e o p e r ati o n o f

’
m a nu f act u r e rs wh o l es a l e br a n ch e s is co ns p i cu ou s is th e
m eat p ackin g in d u stry . E ach o f th e l a r ge m e a t p ack
in g co m p a ni es h as a syst em o f br a n ch h o u s es fr o m
whi ch its p r o d u cts ar e d istrib u t ed d ir e ctly t o r e t a il ers .

With ou t e nt erin g int o th e m a ny co ntr o v ersi a l q u e s

ti o ns r e ga r di n g t h e a ctiviti e s O f th e p a ck e rs it is t o b e
,

p o int e d o u t th a t t h e syst em o f br a n ch h ou s e s a n d
r efri ger at o r c ars e na bl e s a pa cking co m p any t o s ecu r e
a ni cer a d j u st m e nt in t h e d istrib u ti o n o f its p r o d u cts

th a n cou l d b e O bt ain ed by a n y o th e r m e th o d th a t h as
yet b ee n d e vis ed T h e m e a t p ack e rs l ik e th e gr o w e rs
.
,

o f fr e sh fru it a n d p r o d u ce a r e s e llin g a p e rish a bl e

,

p r o d u ct
. Sp eed in m a rk e tin g is ess e nti a l ; o n ly tw o
w ee ks e la p s e fr o m th e p u r ch as e o f th e st eer in th e
st o cky ar d s to th e s a l e O f th e fr esh m ea t in th e d ist ant
r e t a il st o r e T h e inh a bit ants o f th e u rb an d istri cts
.

r e qu ir e a co ntinu o u s s u pp ly o f fr e sh m eat T h e fa ilu r e

.

o f this s u p p ly w o u l d ca u s e h a rd shi p a n d s u ff e rin g An .

e x cessiv e s u pp ly o n th e o th e r h a n d
, ,
w o u l d r e su lt in
w ast e a n d sp o il age A co ntin u ou s flow o f fr esh m eat
.

in s u ch q u antiti e s as ar e d em a n d e d fr o m d ay t o d ay by
th e v ari ou s m ark e ts m u st th e r e f o r e b e p r o vi d e d T he .

o r ga ni z a ti o ns o f t h e l a r ge p ackin g co m p a ni e s app ear t o

fu r ni sh a w ell a d j u st e d m achin e for carryi n g o n this

-

tr a d e with a m inim um o f e co n om i c w ast e Th is is .

o n e e x a m p l e o f t h e s p e c i al c ir cu ms t a n ce s whi ch in

s om e tra d e s h a v e r es u lt e d in th e est ablis hm ent o f

m a n u f act ur ers wh o l es a l e bra n ch es
’
.

T O s um u p it is app ar e nt th a t th er e ar e n u m e r ou s
,

m e th o d s o f d istrib u tin g t h e m e r ch a n d is e th a t is s o l d
t o c o ns u m ers in r e t a il l o ts . T h e co m p e titi o n b e tw e e n
v ar i o u s m e th o d s is k ee n ; fr e q u e ntly it is bitt e r I n .

d et erm inin g th e m eth o d t o b e u s ed in a n y p arti cu l ar

inst a n ce a car e f ul a n a lysis sh o u l d b e m a d e t o Sh o w
,

whi ch m e th o d will r ea ch th e co ns u m er e ff e ctiv e ly ,

e co n o m i ca lly a n d in a m a nn e r t o b u il d go o d will f o r -

th e f u t u r e . I n s o lving e a ch o f th e s e p r o bl e m s j u st as,

in d ealin g with o th er m ark e tin g p r o bl em s it is o nly ,

20 MARK E TIN G PR OBLE M S
s o u n d b u sin e ss p o li cy to co nsi d e r ca r efu lly h o w th e
g e n e r a l int e r e sts o f t h e p u bli c m a y b e st b e s e rv e d .

M ethods of M a r k eti n g Goods f or Wholesa le Con su m p ti on

T h e p l a n t o b e f o ll o w ed in a n alyzin g th e p r o bl em s
o f m a rk e tin g m a t e ri a ls e q u i p m e nt
,
a n d s u p p li e s f o r
,

wh o l e sa l e c o nsu m p ti o n is ess e nti ally si m il ar t o th a t

e m p l o y e d in d e t er m inin g t h e m e th o d f o r m a rk e tin g

m e r ch a n d is e f o r r e ta il d istrib u ti o n T h e co ns u m e rs in
.

this cas e ge n e r ally ar e m a n u factu r ers o r o th er l ar ge

u s ers o f m a t e ri a ls a n d e q u i p m e nt T h e n a t u r e o f th e
.

d e m a n d is d e t er m in ed by t h e co n diti o ns in th e m a n u
fa ctu r in g p l a nt a n d by t h e r e q u ir em ents o f th e p r o d u ct
th a t is t o b e t u rn e d o u t Th u s a w o rst e d m a nu f a ct u r er
.
,

can u se o nly w o o l th a t is s u it a bl e fo r c o m bin g ; b u t t h e

gr a d e o f co m bin g w o o l th a t h e b u ys d ep en d s u p o n th e
s p ecifi c kin d o f c l o th tha t h e is t o t u r n ou t t o m ee t
cu rr e nt co n d iti o ns a n d styl e s in th e c l o th m a rk e t .

T h e wh o l e s a l e c o ns u m e rs o f a n y s p ecifi c m at eri a l
o r d ina rily co nstit u t e a w e ll d efin e d cl a ss
-
.

T h e r aw m a t eri a l tr a d e s a r e b u lk tra de s T he .

wh o l es al e co nsu m er u s u a lly b u ys in l ar ge l o ts He a ls o .

b u ys in a cco r d a n ce with c l early d et erm i n ed s p e cifica

ti o ns whi ch r e qu ir e a s u bst a nti a l d egr ee o f u n if o rm ity
,

in e a ch lo t Wh e n th es e m a t eri a ls ar e p r o du ced in
.

l ar ge q u antiti es by in d ivi du a l p r o du cers or in cl o s e

p r o xi m ity t o th e p o int o f co ns u m p ti o n th e s a l e fr e
~
,

q u ently is m a d e di r ectly by th e p r o du cer to th e co n

s u m er Th u s a coa l mi nin g c om p a ny o ft e n s e lls its
.

p r o d u ct di r e ctly t o r a i lr o a d c o m p a ni e s a n d t o l ar ge
in d u stri a l p l a nts T h e f a rm er gr o win g s u gar b eets
.

s ells his cr op d ire ctly t o th e s u gar fact o ry I n m a ny .

inst a n ce s t h e s e s a l e s a r e m a d e in a cco r dan ce with

“

fo rm a l c o ntra cts callin g for d eliveri es o v er a p eri od

o f ti m e .

I n o th er raw m at eri a l tra d es a m er ch ant p l ays a

,

p r om in e nt p a rt .This o ccu rs p ar ti cu l ar ly wh e n it is
n ecess ary th a t th e m a t eri als sh ou l d b e co ll ect e d fr om
m a ny s m all p r o d u cers gr a d e d a n d ass em bl e d int o
, ,

l a rge l o ts o f e v e n r u nnin g gr a d es Fo r ex am p l e m u ch
.
,

O f th e r aw co tt o n a n d r aw w o o l gr o wn in thi s cou ntry

 MARK E TIN G M E TH O D S 21

an d in f o r e i gn c o u ntri e s p a ss es thr ou gh t h e h an d s o f
m er ch a nts .

O rgani z ed sp ecu l a ti o n is a f ea t u r e o f th e tr a d e in
m a t e ri a ls o f s e a s o n a l p r o d u cti o n th a t ca n b e gr a d ed
a cco r d in g t o w e ll est a blish e d st a n d a r d s int o a s m a ll
-

n u m b er o f gra d e s I n th e gr ain tr a d e t h e C hi ca go
.
,

B oa rd o f Tra d e th e M inn ea p o lis C h am b e r o f C o m

,

m er ce a n d n u m er o u s o th e r instit u ti o ns a ff o r d o p p o r
,

t u n it ie s f o r o r ga ni z e d s p e cu l a ti o n a n d f o r h e d gin g
o p e r a ti o ns by m e r ch a nts a n d m a n u f a c t u r e rs I n th e .

c o tt o n tr a d e t h e N e w Y o rk C o tt o n E x ch a n ge a n d
,

th e N e w O rl ea ns C o tt o n E x ch a n ge p erf o r m si m i l a r
fu n cti o ns .

T h e m e th o d s o f fin a n cin g t h e tr a d e in s o m e ki n ds
o f r a w m a t e ri a ls a r e hi ghly d e v e l o p e d Th u s in t h e .

gr a in tr a d e a n d in t h e c o tt o n tr a d e l ar ge v o l u m e s o f
l oa ns a r e m a d e by b a nks with t h e u se o f e l e v a t o r
r e cei p ts wa r eh o u s e r e ce i p ts a n d r a ilr oa d o r st ea m shi p
, ,

bills o f l a d in g a s c o ll a t er a l s ecu rity T o a ssist th e .

ca ttl e gr o w e r in fi na n cin g his o p e ra ti o ns t h e ca ttl e l o an

co m p a ny h as b ee n d e v e l o p e d .

A n o th e r m e th o d o f m ark e tin g r aw m a t e ri a ls is t h e
au cti o n . T h e a u cti o n syst em wh e r e by t h e f a r m e r
,

s e lls d ir e ctly t o t h e wh o l e s a l e c o ns u m e r i n s m a ll l o ts ,

h a s l a r ge ly s u p p l a nt e d o th e r m a rk e tin g m e th o d s in th e
t o b a cco gr o win g d istri cts o f th e s o u th ern st a t es I n .

th e fu r tr a d e a ls o t h e a u cti o n syst e m p r e d o m in a t es
, , .

O n e O f th e o u tst a n d in g ch a ract eristi cs o f th e tr a de

in raw m a t eri a ls is t h e t e n d en cy fo r th e m e th o d s o f
m ark e tin g ea ch m a t e ri a l t o b e co m e st a n d a r d iz e d .

N ew e x p eri m e nts a r e b e in g tri e d c o nst a ntly a n d n e w

m e th o d s d e v e l o p e d Bu t wh e n e v e r it is cl ea rly e st a b
.

lish ed th a t a n e w m eth o d is m o r e e co n o m i ca l th a n
o th e r m e th o d s in us e th e O l d e r m e th o d s t e n d r a p i d ly
,

t o b e d is ca r d e d .

T h e m e th o d s o f m ark e tin g s e m i m a n u fa ct u r e d a n d
-

m a n u fa ct u r e d m a t e ri al s s u ch a s p ig ir o n st eel c o pp e r
, , , ,

a n d l e a th e r in cl u d e d ir e ct s a l e s e llin g a ge nts a n d
, , ,

m e r ch a nts . I n a s m u ch a s th e m er ch a n d is e u s u ally i .

p r o d u ce d in l a r ge q u a n titi e s o f s p e cifi e d gr a d e a h l
'

in t u rn is s o l d in l a rge l o ts by sp e cifi cati o n to o th e r

22 MARK E TIN G PR O BLE M S
m a n u fact u r e rs , th e m a rk e tin g m achin e ry n ecess a ry f or
h a n d lin g th e s e tr a d e s is m u ch l e ss e l a b o r a t e th a n in
m o st o th e r in d u stri e s I n e a ch tr a d e th e n u m b e r O f
.

p r o d u ce rs is s m a ll a n d t h e n u m b e r o f p u r c h a s e rs a ls o

is s m a ll With few e x cep ti o ns th e p r o cess o f as s em

.

blin g is n o t n e cess a ry , a n d f or m u ch o f th e tra d e Shi p

m ents ca n b e m a d e d ir e ctly fr o m th e p l ant o f th e p r o
d u cer t o t h e p l a nt o f th e co ns u m e r with ou t a n y int e r
v e n in g w a r eh ou sin g T h e m e r ch ant s fu n cti o n is
.
’

r e q u ir e d o nly f o r a s m a ll p o rti o n o f th e b u sin ess whi ch

is ca rri e d o n u n d er s p eci a l c ir cu m st a n ces .

T h e m a rk e tin g o f e q u i p m e nt is q u it e si m il a r t o t h e
m a rk e tin g o f m a n u fact u r e d m a t e ri a ls fo r wh o l es a l e co n
s u m p ti o n in th a t t h e n u m b er O f p r o du cers is s m all a n d
th e n u m b e r o f p u r ch a s ers a ls o s m a ll . N e v e rt h e l e ss ,
th er e is o n e gro u p o f p r o bl em s in co nn e cti o n with th e
m a rk e tin g o f e qu ip m e nt th a t is p ecu li a r t o this fi e l d .

With th e gr o wth o f l a rge m an u fact u ring in d u stri es ,

th er e h a s d e v e lo p e d a s u p p l em e nt a ry s et o f in d u stri e s
m a n u f a ct ur in g p l a nt e q u i p m e nt . Th u s , th er e is a
gr ou p O f m a n u fa ct u r e rs o f t e xtil e m ach in e ry , t h e
m a n u f act u r ers o f sh o e m a chin e ry , a gr o u p o f m a n u
f actur er s o f p rintin g m achi n ery , a n d s o o n .

T h e p r o d u cti o n of th es e hi ghly intri ca t e m a chi n es

n e cessit at es a n e xp ensiv e p l ant a n d o rga ni z ati o n fo r
th e m a chi n e ry m a n u f act u r e r . H is fi e l d o f s a l e is
r e stri ct ed O n ce a n ew fa ct o ry is e qu ipp ed with his
.

p ro d u c t h e ca nn o t e x p ect t o s e ll a n y s u bst a nti a l q u a n

,

tity o f m a chin ery to th a t s am e p l a nt a gain fo r a l o n g

p eri o d o f ti m e e x c ep t f o r o cca si o n a l r ep a ir s a n d p er
,

h ap s for p l ant e xt e nsi o n He c a nn o t c o u nt u p o n r ep e at

.

s a l e s in his m ark e t s u ch a s th e st e e l m a n u fa ct ur er h a s
in s e llin g his p r o du ct I n ti m e s o f b u sin ess d ep r essi o n
.
,

m o r e o v e r t h e m a chi n ery m a nu fa ct u r e r is lik e ly t o fin d

,

his m ark e t p r o stra t e .

Ho w a r e e q u i p m ent m a nu f a ct ur ers t o m eet this

p r o bl em ? Th es e s p e ci a l c ir cu m st a n ce s p ro b a bly co n
s t itu t e o n e O f th e c hi e f r e a s o n s f o r t h e s u cce ss o f t h e

l easin g syst em o f th e Unit e d Sh o e M a chi n ery C o m p a ny

wh e r e by t h e m achin ery m a nu fa ct u r er is in a p o siti o n
to r ep l ace m a chin e s a t his o w n o p ti o n a n d t o e n co u r age
 M ARK E TIN G M E TH OD S 23

n ew cu st om e rs t o b ui l d fa ct o ri es I n t h e t extil e fi el d
.
,

in ti m es o f d ep r e ssi o n b e f or e th e w ar th e m a chin e ry
,

m a nu f a ct u r e rs s o m e tim e s a d op t e d a p o li cy o f t a king
st o ck in n ew m ill com p a ni es in e x ch an ge f or m a chin ery .

This w as a m ark etin g d e vi ce t o e n abl e th e m a chi n e ry

m a nu fa ct u r ers t o k e ep th e ir p l a nts in o p e ra ti o n .

T h e m a rk etin g m eth o d s s u mm ariz ed bri efly in this

st a t em e nt ar e ill u stra t e d in th e p r o bl em s th a t fo ll o w *
.

T h e s e l e cti o n o f th e typ e O f a ge n cy t o b e u s e d is o n e
o f t h e f u n d a m e nt a l p r o bl em s in m a rk e tin g O th e r .

q u e sti o ns o f m a rk e tin g p o li cy a ls o ill u stra t ed in th e

,

fo ll o win g p r o bl em s in cl u d e th e r e l ati o n o f th e s a l es
,

d ep a rt m e nt t o o th e r d ep a rt m e nts in t h e b u sin ess s u ch ,

a s th e cr e d it d ep a rt m e nt ; th e d et er m in a ti o n o f th e

s ellin g p o ints O f th e p r o d u ct ; bra n d a n d tra d e m a rk -

p o li ci e s ; a na lysis o f t h e m a rk e t ; s e l e cti o n tra i n in g a n d

, ,

m a n agem e nt o f th e s a le s for ce ; a d v e rtisin g p l a ns ; u s e o f

th e gu ar a nt ee ; p o li ci e s f or h a n d l in g ca n ce ll ati o ns a n d
r e t u rn go o d s ; a n d fin ally p ri ce p o li ci es
, ,
.

*
u o
E s pe cially v al ab le s u gest i ns o n m e t h ds O fo a n al yz i n g t hes e
pr b l ris ar e giv e n i n A W h aw 8 A n A ppr ac h to B o us i nes s P r oblems
’

ogr
. .
,

pp l z2
 PAR T I I

C O N D I TI O N S D E T E R M I N I N G D E M A N D

H E SE p ro bl e m s ill u stra t e th e infl u e n ce u p o n

d em a n d h e n ce u po n m a rk e tin g m e th o d s o f th e
, ,

co n d iti o ns u n d e r whi ch c o ns u m e rs li v e an d w o rk ,

o f b u yin g h a bits a n d m o t iv e s a n d o f c o ns u m e rs p r e f e r
’
,

e n ces as t o t h e f o r m in whi c h th ey p u r c h as e an a rti c l e .

1 . M O H AW K C O M P A N Y —
I N FLU E N C E O F T HE C O N S UM E R
T h e fo ll o win g st a t em ent r ep r e s e nts one vi ew regar d
in g d em a n d infl u e n ce in m a rk e tin g :

Above all l o om s t h e m anu fa ct u rer Alt o geth er h e is t he .

s tr onge s t f a ct or in t h e fi ght I f h e i s an a dv erti s ing m anu

.

f a ct u re r h e r u l e s t h e s it u ati o n in t h e l a s t a n alys i s
, , He h as .

m a d e his go o d s k n own t hro u gh th eir tr ad e m ark t o con

,
-
,

s u m er s He i s t h e m ak er o f t h e t h i n gs wh i ch thi s co u ntry
.

e at s w e ar s s l e e p s o n pl ay s wit h a n d wo rks with

, , , D e m a nd
,
.

i s t h e vo i ce t o whi ch a ll li s t e n a n d s u b s tit u ti o n ca n o nly

,

m ak e a f eeb l e e ff o rt t o r es i s t o r m o d i fy it .

B y th e s am e writ e r this st a t em e nt a ls o is ”
m ade :

T he co n u m esr h ol d s t h e k e y —
he will b uy wh er e he can

get t h e b es t go o d s ch ea pes t .

T he fo ll o win g is m a d e by a n o th e r writ er 3
:

In a s eri es of o n e hu n dred i n s t an ce s wh ere co ns u m er s

wer e wa t ch ed t o n o t e h o w a n d w hy th ey b o u ght a dv erti s ed
“
g oo d s e i g
,
h ty t h r ee co u c
-
h e d t h e ir fir s t q u e s ti o n H av e y o u ,
” ”
s o an d so ?
- -
a n d s ev e n t e e n I wa n t s o a n d s o This s hows
,
- -
.

t h e a ttit u d e o f t h e av era ge p u r c ha s er w h e n e n t eri n g a s t o re

“
with t h e i n t e n t t o b u y T h e q u e s ti o n H av e yo u s o a n d
.
-

”
so ? i s a l ea d f o r t h e m er cha n t t o p u t f orth hi s fi na l a n d
nece ss ary s al es f or ce T h e co n s u m e r i s s i m ply in a n i n t er
.

ro gat ory a ttit u d e .

q uo t e d i n P T C h er i n gto n A d vertis i g as a
1 Thi s st a t e m e n t is . n
.
,

Bus i nes s For ce p 3 2 , .

3 I bid , p 3 5 . .
3 I bid , p 4 0 . .
26 MARK E TIN G PR OB L E M S
With his direct c o nt act hi s p er s o nal infl u e nce a n d his
, ,

fi nal s elli n g t al k t h e r et ail er is t h e p ower t h a t co ncl u d e s

,

s al es T h e infl u en ce o f t h e ret ail er in i n ti m at e t o u ch with

.

t he co ns u m er s is f ar gr e at er a n d m ore e ff e ctiv e th a n th a t O f
a d i s t a n t m a n u fa ct u r e r wh o s e a ppe a l is by m e ans o f t h e

print e d wor d a l o n e .

N o m att e r h o w s u cces s fu l s elli ng by thr ea t m ay h a v e

b ee n with t h e cons u m er a s t h e i n no cent wi el d er o f t h e
—

”
b ig sti ck t h e r et ail er t od ay k n ows h is p ower
—
He i s n o .

l o n ger s u s cepti b l e t o a n ythi n g b u t t h e d ir ect a ppro a ch with ,

g o o d s a n d p ri c e s a s t h e s e lli n g b a si s This d o e s n o t m ea n
.

that h e d o es n ot recogn iz e a n d a ppreci at e t h e wo nd erf u l a id

o f a s elling ca m p ai gn d ir e ct ed by t h e m an u fa ct u r e r a t t h e
c o n s u m er Bu t it m ea n s that s u ch a cam p ai gn a s a s elli n g
.

f o r ce f r om t h e m a nu fa ct u r er m u s t f oll ow t h e goo d s a n d n o t
pre ced e th em in i m po rt ance .

A thir d wr it er m a k e s the fo llo win g st at em e nt ‘

:

When t he cons um er b uys he d o es t he choosin g He

,
.

a ss ert s his p a rti c u l ar ind ivi d u a lity He e x pr es s e s hi s lik e s

.

o r d i s lik e s d o wn t o t h e m o st s u b tl e d i ff e r e n c e s He wei gh s .

val u es betwee n this a n d that bra nd o f a sim il ar pro d u ct .

He d i s crim ina t es ; h e wa nt s wha t h e wa nt s— an d h e gets it .

T h e f o ll o win g st a t e m e nts ar e m a de by M r E m er .

s on P Ha rr is in
. his b o o k o n C oo p e ra ti o n :
2

I n t h e l as t fif ty y ear s th er e h as grown u p , not ab ly I n t h e

Uni t ed St at e s , a s ys tem o f d i strib u ti o n whi ch, in m y o pi n i o n ,
is c al cu l at ed t o infl u en ce a n d d o es i n fl u e n ce t h e i d ea l s a n d
h ab its of t h e p eo pl e v ery pr o fo u n d ly Thi s sys t em d o e s n ot
.

c o n fine its f u n cti o n s t o f u r n i s hi n g wha t it is f o u nd t h a t t h e

c o ns u m e r wa n t s , b u t e x ert s a s u b tl e b u t p ower f u l a n d f ar
r ea ching infl u ence in d eter min i n g wha t the con su mer s ha ll
wa n t a n d wh a t h e sh all b u y .

SO it h as c o m e t o p a ss th at , in s pit e O f s o ci ety s eff o rt t o

’

en co u ra ge a n d e d u ca t e o u r p o wer t o m ak e ind e p e nd en t
cho i ces , wh eth e r w e will s p e nd o u r m o n ey or n o t a n d wh a t
w e will s p e nd it fo r d e p e nd s l argely u p o n t h e will of t h e p r o
d u cer s a n d d i stri b u t ors o f c om m o d iti e s by wh om w e ar e
a ss a il ed We c o n s u m ers ar e ab ou t as u nco ns ci o u s o f thi s
.

i n fl uence a s w e a r e o f increa s ed pr es s u re Of t h e a tm o s ph er e
wh e n w e d e s ce nd from t h e m o u nt ain t o t h e vall ey , b u t t h e
f act s ar e f u lly d em o ns trat ed by fi gu r es .

1 Th is st a t em en t is q uo t e d in P T C h er in gt o n , Ad vertis i n g as a
. .

Bus i ness For ce, p 8 .

s o n P Harris , Coop er ati on the Hope of the C ons u me r , pp 5,

3 E 1 eI -

n
. .

6 an d 2 1
 T HE C O N SUM E R 27

I cl ai m th at thro u gh thi s i n fl u e n ce o f a ggre s s iv e m ark e t

,

in g c o ns u m er s a r e ca u s ed t o b u y wh e n th ey sh o u l d n o t s p e nd
,

their m o n ey ; a r e ca u s ed t o b u y wro ng thi n gs ins t ead o f

things s u it ed t o th eir ne ed s ; a r e d i s tra ct e d fr om ch o o s i n g
wi s ely a n d a r e aff ord e d ins u ffici e nt f a ciliti e s to a id in
wi s e s el ecti o n .

=l= 4=

I s t h e co ns u m er afford e d pro p er f aciliti es t o enabl e him

to ch o o s e wi s ely ? I n t h e o pi n i o n o f t h e writ er there i s n o
d epart m e nt in o u r s o ci al li fe whi ch l ea v e s so m u ch t o b e
d e s ir e d We A m eri can s a r e f ar a b l er t o t u rn o u r e flo r ts int o
.

d o ll a r s th a n t o t u r n o u r d o ll ar s int o r e a l u tility v al u e s We .

work hard a n d s u cces s f u lly t o e arn m on ey b u t th en w e ,

‘
s p end o ur m oney f or that whi ch i s n o t bread a n d o u r l ab o r
f o r th at whi ch s a tis fiet h n o t Wh e n o u r forefa ther s
’
.

f a s hi o ne d wi th th eir o wn h and s th at whi ch th ey we r e t o

u se, t h e m anu a l e ff o rt was a n a u t o m a ti c r e s traint u p o n
s p e ndi ng i t f o r u s el es s thi n gs Bu t w e n o w work f o r m o ney
.

a n d h av e n o c o n ce pt i o n o f its v a l u e It i s here th at w e a r e
.

a t s ea I n t h e ab s ence o f d o m i na ting li fe pu r po s e a n d
.

d efi n it e p la n we d ri f t , We ar e pecu liarly s u s cepti b l e t o t h e

.

infl u en ce o f s al es p er s u a si o n pri n t ed a n d o ral a n d w e a r e

, ,

woef u lly with ou t r eal int ellige nt gu i da nce .

C on si d erin g th es e st at em e nts fr om t h e st an dp o int

o f t h e p r esi d ent o f th e M o h a wk C o m p a ny , r e ce ntly

o r ga ni z e d f o r t h e m a n u f ac t u r e o f a x es an d si m i l a r

t oo ls , w h i ch vi e w r egar din g th e infl u en ce o f t h e

co n s u m e r is correct ?

2 . A M E R I C A N LO C O M O T I V E C O M P A N Y
In 1 9 06 th e A m e ri ca n Lo co m o tiv e C o m p a ny
e n gage d in t h e a u t o m o bil e b u sin ess 1
T h e c o m p a ny .

a cq u ir e d t h e Am e ri ca n ri ghts t o t h e Fr e n ch Be r li e t car

a n d f or th e i m p o rt a ti o n o f p a rts a n d tir e s fro m a br o a d .

A l ar ge f a ct o ry w a s b u ilt in Pro vi d e n ce , Rh o d e I sl a n d ,
an d w a s inv e st e d in this a u t o m o bil e b u si
n ess T h e car w a s a m ech a ni ca l s u cce ss a n d so l d a t
.

P ri nter s I Au gust 28 , 1 9 1 3, p p 8 2 83
’
1 n k, .
-
.
28 MARK E TIN G PR OBL E M S
a hi gh p ri ce I n 1 9 1 3 th e c o m pa ny is s a i d t o h a v e
.
,

r ank e d thir d i n th e Unit e d St a t e s in th e m a n u f a ct u r e

o f co m m e r c i a l m o t o r v e hi cl e s I t is fu rth e r st a t ed th a t
.

th e c o m p any e st ablish ed a s ervi ce st ati o n i n L o n g

I sl an d C ity a no th e r in San Fr an cis co s u p p l em e nt e d
, ,

by h ea d q uart ers a n d br a n ch o ffi ce s in N ew Y o rk ,

C hi cago Bo st o n a n d Phil a d e l p hi a Fo r th e fir st thr e e

, ,
.

o r f o u r y ea rs a ft e r t h e c o m p a ny w a s e st a blish e d its ,

p r o d u c t w as s o l d e ntir e ly thr ou gh f o u r r e t a il br a n ch e s .

D u rin g th e n ext f ou r y ears e i ghty nin e a ge n c i e s w e r e -

e st a blish ed .

I n Au gu st 19 1 3 th e com p any a nn ou n ced its with

, ,

d rawal fr om th e m an u fa ct u r e a n d s a l e o f a u t o m o bil es
a n d m o t o r t ru cks T h e v e nt u r e wa s s a i d t o h a v e b ee n
.

u ns u ccessfu l fr o m a c o mm e r ci a l st a n d p o int Wh il e th e .

l o ca ti o n o f t h e f a ct o ry was c o nsi d er ed a d is ad v ant age ,

th e m aj o r d i ffi cu lty w as s u pp o s ed t o h a v e b ee n in t h e
s a l es m e th o d s I t was st a t e d a t th e tim e th e a nn ou n ce
.

m e nt o f th e d is co ntin u a n ce o f th e a u t o m o bil e b u sin ess

was m ad e th a t th e co m p a ny h a d n o t r ealiz e d a t l east ,

u n til t oo l a t e th a t q u it e d iff e r e nt m e th o d s w er e
,

r equ ir ed fo r th e s a l e o f a u t om o bil e s fr om th e m eth ods

u s e d in m a rk e tin g l o c o m o tiv e s .

H o w d o t h e m e th o d s r e q u ir e d f o r th e s a l e o f a u t
m o bil e s d i ff e r fr om th e m e th o d s o f m ark e tin g l o co
m o tiv e s ?

3 . SA L E OF FA R M P R O DU C E BY P AR C E L P O ST l

M r J a m e s H o l d e n w h o o wns a f arm in n orth ern

.
,

O hi o h as b e co m e d iss a tisfi e d with t h e p ri ce s p a i d hi m

,

by l oca l b u y ers f or v ege t abl e s e ggs a n d p ou ltry , , .

p rtmen t of A gri c u lt u r e Fa rm er s B u lleti n 703 : S u gges t

1 U S De ’ “
. . a ,

io n s for P ar cel P ost M a rk e t i g U S D p a rtm en t of A gri cult u re

n . e
,
. .

B u llet N o 6 88:
in .M ar k et i g Be rries a n d C h e rr ies b y P ar ce l P os t
“
n .
’

U S Dep rtmen t of A gr ic u ltu re Fa rm er s Bulleti n 9 3 0:

. . a , M ark eti n g ’ “

Bu tt er a n d C h e ese by P ar cel P os t ”
.
 T HE C ON SUM E R 29

C o ns e q u ently h e is t u rnin g his a tt e nti o n t o t h e p o s s ib il

iti e s o f th e u s e o f p ar ce l p o st f o r s e llin g d ir e c t t o
co ns u m e rs .

Wh a t c o n di ti o ns m u st h e fu lfill in o r d e r to b u il d u p
th e n e ce ss ary v o l u m e o f p a r ce l p o st b u sin e ss a n d
-

r e t ain th e pa tro na ge o f cu st o m e rs ?

4 . C O N VE N I E N C E G O O DS AN D SH O P P I N G G O O D S
A d istin cti o n b a s ed o n b u yin g h abits fre q u e ntly is
m a d e b e tw ee n c o nv e ni e n c e go o d s a n d sh opp in g go o d s 1
.

C o nv e ni e n ce go o d s in cl u d e m er ch a n d is e th a t o r d in arily
is p u r ch as e d a t th e p l a ce th a t is m o st co nv eni e nt t o th e
co ns u m e r Sh o pp in g go o d s in c l u d e m e r ch a n d is e in th e
.

p u r ch a s e O f whi ch th e co ns u m e r wish es t o co m p a r e
q u a liti es a n d v a l u e s .

T h e T o n awa n d a H o si e ry C om p a ny m an u f a ct u r es
w om e n s a n d chil d r e n s h o si ery
’ ’
I s its p r o d u ct to
.

b e co nsi d e r e d in th e cl a ss o f co nv e ni e n ce go o d s o r
sh o p p in g go o d s ?
T h e R a v e n M a nu fa ct u rin g C o m p a ny m a n u fa ct u r es
m e n s u n d e rw ea r o f m e d i u m gr a d e
’
I ts br a n d is wi d e ly
.

a d v e rtis e d I S its p r o d u ct in th e c l a ss o f c o nv e ni e n ce
.

d s in t h l ss f sh in d s ?
g o o o r e c a o o pp g g o o

T h e D u n d ee Fl ou r C o m p a ny p r od u ce s hi gh gra d e -

br an d e d fl ou r I n whi ch cl ass o f m e r ch a n d is e is its

.

p r o d u c t t o b e in c l u d e d ?
1 C C P ar li n , M er cha n d is i n g of Tex ti les
. . .
30 MARK E TIN G PR OBLE M S
5 . B R O A DW A Y DE P AR T M E N T ST O R E —
SI L K B UY I N G
silk b u ye r o f th e B r o ad wa y D ep art m e nt St o re
T he ,

N e w Y o rk C ity is r e sp o nsibl e f o r t h e m a n agem e nt o f

,

th e s ilk d e p art m e nt in th a t st o r e a n d f or t h e p u r ch a s e
o f silk p i e c e go o d s T h e st o r e a i m s to b e in th e f o r e
.

fr o nt in a ll m att e rs o f styl e .

I f a p o o r s e l e cti o n o f m e r ch a n d is e is m ad e th e ,

m e r ch a n d is e is d isp o s e d o f a t m a rk d o wn s a l e s a n d th e
-
,

d ep a rt m e nt is r a t ed u p o n t h e n et p r o fit sh o wn o n th e
t o t a l s a l e s in clu d in g th e m a rk d o wns T h e p u r ch as es
,
-
.

o f silk go o d s u s u a lly a r e m a d e t w o t o thr e e m o nths in

a d v a n ce o f th e o p e nin g o f th e s e llin g s eas o n in t h e

r e t a il st ore .

Wh at styl e infl u ence s m u st th e silk b u ye r o f th e

B roa d wa y D ep art m e nt St o re t ak e int o a cco u nt in
p l a cin g o r d ers f or s ilk go o d s ?

6 LO N GS P UR C L O T H I N G C O M P A N Y
.
-
ST YL E T E N DE N C I E S
T h e d esi gn e r o f th e Lo n gs pu r C l othin g C om p a ny
b egins th e s e l e cti o n a n d d e v e l op m e nt o f t h e styl e s fo r
a n ew s ea s o n a b o u t thr ee m o nth s b e f o r e t h e s a l e s m e n

st art ou t t o s o li cit o r d ers fr o m r e t a il ers a n d a b ou t e i ght

m o nths b e f o r e th e go o d s ar e o ff e r e d f o r s a l e t o th e
p u bli c in r e t a il st o r es Th e re a r e t w o s eas o ns e ach
.

y ear , th e s p rin g s e as o n a n d th e f a ll s e a s o n T h e C om .

’
p a ny m a n u fa c t u r e s m e n s a n d yo u ths cl o thi n g in
’

m e d i u m p ri ce lin e s
-
.

Wh at f a cts can this d esi gn er u s e in j u d gin g styl e

t e n d e n ci e s f or this b u sin ess ?
 T HE C O N SUM E R 81

7 O X FO R D
. A DD I N G M A C H I N E C O M P A N Y —
N E W M O DE LS
T h e O xfo r d A dd in g M a chin e C o m p a ny fr e q u e ntly
brin gs ou t n ew m o d els o f its m a chin es T h e p r o d u ct
.

’
is s o l d d ir ec t t o co ns u m ers by th e co m p a ny s s a l es m en .

T o wh a t e xt e nt sh o u l d t h e c o m p a ny p e r m it its s a l e s m e n
t o s o li cit o r de rs fr o m cu st o m ers w h o a lr ead y a r e u s in g
ea rli e r m o d e ls o f this com p a ny s m a chi n es
’
.

8 .M O N T E R E Y A UT O M O B I LE C O MP A N Y ST YL E —

D u rin g th e fir st d e cad e o f t h e gr o wth o f t h e au t o

m o bil e in d u stry n u m e r o u s m a n u fact ur e rs br ou ght o u t
a nn u a l m o d e ls o f th e ir ca rs So m e c h a n ge s w er e m a d e
.

“ ”
a n n u a lly f or styl e th a t is m er e ly t o h a ve s o m e
—
,

thi n g n ew a n d d iff er e nt fr o m p r evi ou s m o d els At .

th e p r e s e nt ti m e ch a n ge s in m o d e ls a r e l e ss fr e qu e nt ;
m a ny a r e b as ed c hi efly o n t e chni ca l i m p r o v e m e nts .

“ ”
A n o th er as p e ct o f th e styl e f a ct o r in m a rk e tin g
au t o m o bil e s is in d i ca t e d in t h e f o ll o win g st a t e m e nt ,

q u o ted fro m C C P a rlin : The M er cha n dis i n g of

. .

A u tom obi les ( p age s 1 5 1 6 ) —

T h e p l ea s u r e ca r i n vo lv e s t h e s tyl e el e m e nt ; f o r t h e
p l ea s u r e car i s t he tr av e li n g r e p re s en t a tive O f a m a n s t a s t e
’

o r r e fin e m e n t . Fe w p eo p le s e e t h e ki n d o f c a r p et s o r
d ra p eri e s w e h av e in o u r h o m e , b u t e ve ryo n e n o ti ce s t h e
ki n d of a car we d rive , a n d a d il api d at ed pl ea s u r e c a r , li k e
a d e cr e pit h o r s e , a d v erti s e s th a t t h e d riv e r i s l a ck i n g in
f u n d s o r l a ck i n g in pri d e .

A ppli e d t o p l eas u r e car s t he s tyl e e l e m en t di ct at e s

1 Tha t cha n ge s m u s t b e m a d e f r o m ti m e t o ti m e i n
.

“
tho s e f eat u r es th at d et e r m i n e t he a p pe a r a n ce a n d t al k in g
”
po ints of a car .

Styl e in t h e a u t o m o b il e m eans m o r e tha n p a i n t , u p h o l

s t e r y an d b o d y li n e s ; it incl u d e s a ll th o s e e l e m e n t s whi ch
32 MARK E TIN G PR OBL E M S
are th e s u bj e ct O f a r b itra ry p r ef eren ce. I f , f or a n ex am pl e ,
t he n u m b er o f cyli n d er s in a c a r i s s e l e ct e d o n t h e b a s i s o f
e ffi ci e n cy o r co s t , t h e n u m b e r o f cyli n d e r s l o s e s t h e s tyl e

e l e m e nt a n d b e co m e s m er e ly a p art o f t h e m e ch an i s m . Bu t
wh en ever a m a n s el ects his n u m b er o f cyli n d er s m er ely as
a q u e s ti o n o f pr efer e n c e , t o k ee p u p with hi s n e i gh b o r , t o
have s o m et hi n g t o t a lk ab o u t , t o p le a s e a f a n cy , with him
t h e n u m b e r o f cylind ers pr e s ent s t h e ph e no m e n o n O f styl e
p u r ch a s e
.

2 That wit hin an y give n cl as s a m a n u f act u r er

. ca nn o t
get an d pe rm an en tly h ol d m u ch m o r e t h an 50 p er ce n t o f
h is m a rk et ; f o r a s tyl e r ea cti o n a u t o m ati cally s et s in a ga ins t
a n yo n e wh o c o ntr o ls a m aj ority o f a styl e m ar k et .

Wh a t is th e si gn ifi ca n ce o f th e s e st a t em e nts fr o m ,

th e st a n d p o int o f th e M o nt e r e y A u t o m o bil e C o m p a ny ?
T h e M o nt er e y ca r h as a w e ll e st ablish ed m a rk e t
-
I ts .

s e lli ng p ri ce is a b ou t T h e ca r is w e ll d e si gn e d
an d is u nu s u a lly e co n om i cal in co nstru cti o n a n d
o p e r a ti o n .

9 . F
. W P ON D C OM PAN Y
.
—
DE M A N D
The F W P o n d C o m p a ny op e ra t es a hi gh cl ass
. .
-

d e li ca t e ss e n st o re in o n e o f th e l ar ge c iti e s in N e w
E n gl a n d . T h e co m p a ny co nt e m p l a t e s O p e ni n g a
S i mi l a r st o r e in a r e si d e nti a l t o wn a b o u t 2 0 m il e s fr o m

th e c ity in w hi ch its m a in st o r e is l o ca t e d .

Wh a t inf o rm a ti o n r ega r d in g th e p o ssibl e d em a n d

f o r its m e r ch a n di s e in this n ew l o ca ti o n sh ou l d b e
s o u ght ?
 T HE C O N SUM E R 33

10 . B AD G E R M AN U FA C T UR I N G C O M P AN Y —
B UYI N G
H A B I T S O F C O N S UM E R S
T h e B a dge r M a n u fact u rin g C o m pa ny p r o d u ces e n
am e l w a r e f o r kit ch e n u s e in a wi d e v a ri e ty O f a rti cl e s

a n d styl e s o f s e v e ra l q u a li ti es T h e c o m p a ny h as
.

r e ce ntly d e ci de d to st a rt a n e xt e nsiv e a d ve rtisin g

cam p a i gn in o r d er t o in cr ea s e its sa l es .

Wh at ar e th e b u yin g h abits a n d m o tiv e s O f co n

s um e rs p u r ch asin g s u ch p ro d u cts whi ch th e a d v e rtisin g
,

m a n a ge r o f t h e B a d ge r M a nu fa ct u rin g C o m p a ny sh o u l d
t ak e into a cco u nt in p lan nin g thi s cam pa i gn ?

1 1 ST U M B LO
. P O TT E R Y C O M P A N Y V AR I E T Y
—
OF ST YLE S ,
P A T T E R N S AN D SI Z E S
,

D u rin g th e war , in a cco r d a n ce with th e s ch ed u l e o f

th e C o ns erv a ti o n D ivisi o n o f th e Wa r I n d u stri e s
Boar d , t h e Stum blo P o tt ery C o m p a ny m a d e a s u b s ta n
ti al r ed u cti o n in t h e n u m b e r o f styl es , p a tt e rns , an d
siz es o f its p rod u ct T h e C o ns erva ti o n s ch e d u l e w as
.

as f o ll o ws :
S C H E DU LE FO R MA N U FA C T UR E R S O F V I T R I FI E D CHI N A

1 . NO m o u l d s t o b e m ad e d u rin g t h e w ar f o r a n y a r t i cl e
n ew
n o t o n t h e r e s tri ct e d li s t a n d n o n e w d e c a lc o m a n i a p a t
t erns o r co pper pl at e e n gr avi n gs t o b e a dd ed .

2 . No n ew lines t o b e pl a ce d on t h e m ark et , ve n i n cas e s

e
where t he d e cal com a ni a s or co p p e r p l at e e ngr a vi n gs
ar e m ad e .

Spe ci al d e s i gns a lr e ad y pr e p are d b y a n y p o tt ery n o t t o

b e d u pli cat ed b y an y o the r p o tt ery d u ri n g t he w ar‘
.

4 . D u ri n g t h e p eri o d of t h e wa r eac h
m a n u f a ct u r e r t o
r e stri ct hi s li n e t o n ot m o r e t ha n t w o b as i c h o t e l S ha pe s ,
“ “
t o b e k n ow n a s R o ll e d E d ge a n d Thi ck o r Ro ll ed
”
E d ge a n d Q u ar t e r Thi ck .
34 MARK E TIN G PR O BL E M S
5 . E a ch m an u f a ct u r e r a l s o t o r e s tri ct h is li n e to one b as i c
s h a pe o f d i n n e r war e f o r f a m ily u s e .

6 . T he ab o ve t hr ee li n e s t o b e m ad e on ly in t h e f o ll owing
a rti cles :
”
B aker s T h i ck ,
1
2 2 3 6 8
B ak er s R o lle d E d ge
,
3 5 8
B owl s Th i ck,
24 s 30 s 36 3 4 2s
B owl s R o ll ed
,
24 s 3os 363 4 28
”
Indivi d u al B u tt er s T hick 2 2 1
,

I n divi d u al B u tt er s R o ll ed or 3 ,

C ak e C o ver 1 —

C el ery Tr ay o r R eli sh D i s h 1 —

C o ff ee P o t In d ivi d u al —

C u p s C o ff ee
,
3 an d s a u cer s t o m at ch
,

C u p s E xtr a T e a
,
2 a n d s a u cer s t o m at ch ,

C u p s T ea
,
3 a n d s a u cer s t o m at ch
,

C u p s A ft er D i n n er 2 a n d s a u cer s t o m at ch
, ,

C u p s B o u ill o n 2 a d s a u cer s t o m at ch
,

C om p o rt s 5
”
6 —
p ,

C r e am s Ind ivi d u a l 1 o z 1 % o z 2% o z 4 o z (h an d l ed
,
—
.
, .
,
.
, .

a n d u n h an d l ed )
D i s he s Thi ck ,
4 6 8 10
D i sh es R o ll e d 4
,
6 8 10 —

G r ap e Fr u it D i sh 1 —

E gg C u p s D o u b l e B os t o n Wh eat o r C u st ar d ( u nh an d led)
—

Fru it Sau cer s Thi ck 3 siz e s ,

—

Fr u it Sau cer s R o ll e d 3 siz e s ,

—

I ce C r e am s Thi ck 1 siz e ,

I ce C r eam s R o lle d 1 siz e ,

—

J u gs 6 s 1 2s 24 s 36 s 4 2s 4 8s 54 s 6 0s 72s
J u gs H all B oy
,
3 0s
M at ch Stan d 1 s iz e —

C o ff ee M u g 2 s iz e s —

M u s t ar d 1 siz e —

”
N ap p i e s 8 9 ,

N ap pi es C er ea l ,
1 s iz e
N app i e s O a tm eal 1 s iz e
,
—

”
N a p p i e s O ys t e r , 5
” ”
Plat e s Flat Th i ck 4
,
5 , 6 7 8
”
Plat e s Flat R o lle d 4
,
— 5 6
,
7 8
” ”
Sou p s Thi ck ,
5 or 6 ( b u t n o t b o th) 7
”
So u p s R o ll e d 5 or 6 ( b u t n ot b o th) 7
,
—

C o u p e So u p s 1 —

Si ck Fee d er 1—

G rill Pl at es— 2
Pi ck le— 1
R am ik in — l
”
R ou n d Sal ad s — 4 5 6 7 8 11
S a u c e B oat s —
N os 1 2 3 .
 T HE C O N SUM E R 35

Su gar s , H ot el— 1
S gar s , H o s pit al 1
u —

Su gars , R e s t a u ra n t— 1
Spitto o n— l
C a nd l e Sti ck— 1
M at ch Safe— 1
h
Br us Vase l —

Soap 1—

T h e c o m p a ny s e lls its p r o d u ct t o r e t ail ers thr o u gh

ou t t h e E a st e rn h a lf o f th e Unit e d St a t es .

Wh a t c o n d iti o ns infl u e n cin g d em a n d will gu i d e

th e Stu m b lo P o tt ery C om p a ny in d e ci d in g wh e th er or
n o t t o r e st o r e styl es a n d siz e s e lim i n a t ed in a cco r d a n c e

with this s ch e d u l e a n d a ls o in d e v e l op in g n ew styl e s ,

p a tt e rns , a n d siz es f o r fa mi ly us e ?

12 . SE N E C A FL O U R M I LL I N G C O M P AN Y
P A C K A G E T R A DE
T h e Se n e ca Fl our M il lin g C o m p a ny m a n u f act u r es
a go o d q u a lity o f fl o u r f or h ou s eh o l d u s e This fl ou r
.

is s o l d in b a rr e ls , a n d als o in q u ar t e r b a rr e ls ,
p o u n d b a gs , 5 p ou n d p a ck a ge s a n d 3 % p ou n d p a ck
a ges . T h e r e t a il p ri ce for th e s m a ll e r p a ck ages is
25 3 3 % m o r e p er p o u n d th a n th e r e t ail p ri ce f or this
—

fl o u r wh e n s o l d by th e b arr e l This hi gh er p ri ce is
.

d u e t o th e e xtra co st whi ch t h e m a n u fa ct u r e r in cu rs in
p a cki n g a n d h a n d lin g fl ou r in s m a ll p a ck a ges Th es e .

s m all pa ck a ge s h a v e a h ea vy sa le in th e t e n em ent
d istri ct in N e w Y o rk C ity .

I s th e Se n eca Fl ou r M ill in g C o m p any j u stifi ed in

s e l lin g fl ou r in s m a ll p a ck a ges f o r this tra d e a t this
‘

p ri c e d i ff e re nti a l ?
1 See P T C h e ri n gt o n , Ad verti si n g B ook- 1 9 1 6 , pp 3 8 , 4 9 7 506
. . .
— —
.
36 MARK E TIN G PR O BL E M S
13 . DI A MO N D SU G A R C O MP AN Y —
P A CK A G E TR ADE
T h e D i a m o n d Su ga r C o m p a ny o p er a t e s e i ght b e e t
s u ga r f act o ri e s in C o l o ra d o a n d s o m e o f th e a d j o inin g
st a t e s
. Up t o this ti m e th e co m p a ny h as s o l d its
p r o d u ct e ntir e ly in b u lk I ts s a l es ar e m a d e chi e fly to
.

wh o l es a l e gro cers in th e M iss ou ri R iv er t e rrit o ry , wh er e

its p r o d u ct co m es int o co m p etiti o n with c an e s u gar
fr o m E a st ern a n d Sou th e rn r e fin eri e s .

B ee t s u ga r w as a t o n e ti m e co nsi d er ed to b e o f
s o m ewh a t p o o r er qu ality th a n ca n e s u ga r a n d w as s o l d
a t a sli ghtly l o w e r p ri ce A st a t em e nt h as b ee n m a d e
.
,

h o w e v e r in a b u lle tin O f th e U ni t ed St a t e s D ep art m e nt

,

o f A gri cu lt u r e th a t th e r e is n o d iff e r en ce in t h e sw e e t

n ess o f b ee t s u ga r a n d ca n e s u gar a n d tha t e xp erim e nts

“
h a v e in d i ca t e d th a t u n d er b o th co mm er ci a l a n d
h ou s eh o l d co n d iti o ns b ee t s u ga r a n d ca n e su gar giv e
e q u a lly s a tisfact o ry r e su lts f o r ca nnin g fr ui t a n d a ls o
”l
fo r j e lly m a king .

Wh a t e v er m ay b e th e r e la tiv e m erits o f b ee t a n d
ca n e s u ga r ,
n e v erth e l ess ca n e su ga r o rdin ar ily is s o l d
a t a s o m e wh a t hi gh e r p ri ce th a n b e e t s u gar in th e

s am e m a rk ets .

D ur in g th e l a st e i ght or t en y ea rs th e sa l e s o f s u ga r
in p a ck a ge s h av e h eavily in cr ea s e d in th e E a st ern p art
o f th e Unit ed St a t es . P ack a ge ca n e s u gar is int e nsify
in g th e co m p etiti o n th a t t h e D i am o n d Su ga r C o m p a ny
m u st m e e t . This c o m p a ny can se ll its s u gar in two
a n d fiv e p o u n d car t o ns a t a n in cr ea s e d c o st t o t h e

m a n uf a ct u r e r o f o n e h a lf c e nt p er p ou n d
-
T hi s a d d i
.

t io n al co st is n o gr e a t e r th a n t h e c o st in cu rr e d by c a n e
s u gar r e fin ers in p a ckin g th eir s u gar in pa ck a ge s .

Sh o u l d th e D i a m o n d Su ga r C o m p a ny u n d ert a k e
to m ar k e t a t l e a st a p o rti o n O f its p r o d u ct in p a ck age s ?
1 U S De a rtmen t o A ric ult u re Fa rmer s B ulleti n 329 M ay
’
. .
p f g , , .
 T HE C O N SUM E R 37

M I LK T R AD E ,
N Ew YOR K C I T Y
T h e mi lk d ea l ers in N ew Y o rk C ity h a d t o f a ce t h e
fo ll o win g p r o bl em in th e fa ll O f 1 9 1 9 Alth ou gh t h e .

fi gu r e s st at e d in this p r o bl em ar e n o t e x a ct , th ey a r e
app r o xi m a t e ly c o rr e ct .

T h e c o st o f m ilk a n d o p e r a tin g ex p e ns es w er e a s
f o ll o ws in Sep t em b er , 1 9 1 9 :
P er Q u a rt
C o st of m ilk ( G r a d e B ) to th e c ity d ea l e r
u p t o t h e p o int o f w a go n d eliv e ry .

Wago n d e liv ery . . 04

R e t a il s e llin g p ri ce . 16
N e t p r o fit . . 0025

B e tw ee n Sep t em b e r a n d N o v em b e r th e p ri ce p a i d
by th e milk d ea l ers t o th e c o u ntry p r o d u cers w a s
ra is e d m o r e th a n o n e ce nt p er q u a rt T h e mi lk d eal e rs
.

fin d it n ecess a ry t o p u r ch a s e e n o u gh m ilk in t h e cou n

try t o insur e a s u ffi ci e nt s u pp ly in t h e city a t a ll ti m es
i n s p it e o f th e s eas o n o r t em p era t u r e C o ns e q u e ntly
.

th ere is a lwa ys s om e s u rp l u s l e ft in th e d ea l ers h a n d s ’

,

whi ch m u st b e m a nu fa ct u r ed int o b u tt er c h ees e a n d , ,

o th e r b y p r o d u c ts
-
. T h e b y p r o d u cts m a nu f act u r e d in
-

t h e au t u m n u s u a lly a r e s o l d a t a l o ss a s th e y a r e f o r ced
to co m p e te o n th e m a rk e t with s im il a r p r o d u c ts th a t
w er e p l a ce d in co l d st o r a ge in th e p r e vi o u s s p rin g ,

wh e n th e y cou l d b e m an u fa c t ur e d in cou ntry d istri cts

a t a l o w e r co st . I n a dd iti o n t o this s u rp l u s th e r e is a
,

m a t e ri a l shrink a ge in b u yin g m er ch a n d is e by th e
p o u n d a n d s e lli n g by t h e p a ck a ge T h
. e hi gh e r p ri ce

p a i d t o c ou ntry p r o d u ce rs in cr e a s e d t h e c o st o f th is
s ur p l u s a s w e ll a s t h e c o st O f t h e m ilk s o l d a t r e t a il .

Alth ou gh th e in cre as e in th e p ri ce p a i d t o t h e
co u ntry p r o d u ce rs was o nly sli ghtly m o re th a n o n e

ce nt it w a s n e ce ss a ry fo r t h e m ilk d e a l e rs t o in cr ea s e
,

t h e r e t a il p ri ce in t h e c ity t w o c e nts p e r q u a rt in o r d e r
t o m a k e t h e s am e p r o fit a s b e f o r e ce nts p e r

q u art T h e N ew Y o rk r e t a il p ri ce in N o v e m b e r 1 9 1 9
.
, ,

th e re fo r e w a s in cr e a s e d t o 1 8 c ents p er q u art
,
.

Pri o r t o this in cr ea s e in p ri ce t h e l o a d d istrib u t e d

,

in th e city p er w a go n h ad b e e n w o rk e d u p a p p r o xi
38 MARK E TIN G PR OBLE M S
m a t e ly t o 3 00 q u arts p e r d ay With th e in cr eas e in c ity
.

p ri ces , t h e a v e ra ge l o a d i mm e d i a t e ly d r o p p e d t o a b o u t
250 q u a rts p er w a go n Fr o m p a st e x p eri e n ce it was
.

kn own th a t it w o u l d t a k e s o m e tim e to get b ack t o a

n o rm a l l oad I n th e m e anti m e th e d eliv ery co st h a d
.

in cr eas ed fr om 4 cents p er q u a rt to c e nts p er q u a rt .

This t u rn ed th e e stim a t ed p r o fit o f 0025 cents p er

.

q u art int o a n act u a l l o ss o f 0055 c ents p er q u a rt

. .

Wh e n th e in cr ea s e in th e r e t a il p ri ce o f m ilk o ccu rr ed
th e m i lk d riv e rs u ni o n d em a n d e d an im m e d i a t e in
’

cre as e in w a ge s fr o m $ 3 0 t o $ 50 a w ee k an d a n a dd i

t io n al co mm issi o n o f 2 % o n s a l es with sh o rt er h our s .

I f this d em a n d w e r e t o b e gr a nt ed , this in cr eas e a l o n e

w ou l d a d v a n ce th e d e liv e ry co st O f m ilk m or e th an o n e
ce nt p erqu art .

Be cau s e o f th e d ecr ea s ed r e t a il s a l e s an extr a ,

q u a ntity o f m ilk h a d t o b e m a nu fact u r e d int o by

p r o d u cts T h e s am e p ri ce was p a i d in th e co u ntry fo r
.

a ll m i lk wh e th e r s o l d a t r e t a il o r m a n u fa ct u r e d int o

b y p r o d u cts
-
T h e n ece ssity o f u sin g a l a rger p o rti o n
.

o f th e m ilk f o r th e m a n u fact u r e o f b y p r o du cts th u s

-

cau s ed a n a dd iti o n a l l o ss t o t h e d ea l ers .

T h e co nsu m ers w e r e n o t p l eas e d with th e hi gh

p ri ce o f m i lk in th e c ity a n d s e v era l o rgani z a ti o ns
u nit e d t o st a rt su c ce ssfu lly a co ns u m ers strik e thr ee
’

d ays a w eek On th e d a ys wh en th e strik e was in

.

e ffe ct each r o u t e l o st o n an a v e r a ge 50 q u ar ts in sa l es
, .

T h e o th e r f o u r d a ys each w eek th er e wa s a sli ght gain ,

bu t n ot e n ou gh to o ff s et th e l o ss o n o th er d ays T h e .

co ns u m ers strik e a ga inst th e hi gh p ri ce o f m ilk

’

in cr eas ed th e co st o f d e live ry m o r e th a n 003 cents .

p er q u a rt .

Wh a t p o li cy sh o u l d th e d ea l ers h av e adop t ed u n d er
th es e cir cu ms t an ces ?
 T HE C ON SUM E R 39

15 . SAG A M O R E T R A C T O R C O M PA N Y I N FO R M AT I O N
—
To

B E G I V E N T o P R O S P E C T I VE C U S T O M E R S

T h e Sagam o r e Tra ct o r C o m p a ny m a n u fa ct u r e s
tra ct o rs th a t ar e w e ll b u ilt t o st a n d h ea vy w o rk For
, .

s ev e ra l y ears th e com p a ny h as b e e n co n d u c ting e xt en

siv e e xp eri m ents a n d a ls o h as s e cu r ed d et a il ed d a t a o n
th e o p e r a ti o n o f its tr a ct o rs a s u s e d by fa r m ers u n d e r a
v ari e ty o f co n d itio n s a n d for var i e d p u r po s e s A s a
.

r esu lt th e c o m p an y h as intr o d u ced s e v e r al i m p r o v e

,

m e nts in its m o t o r o v e r m any o f th e m o t o rs u s e d b y

o th e r tr a ct o r m a n u fa ct ur e rs. I t a ls o h as im p r o v e d
th e d esi gn O f th e tr a ct o r s u bst anti a lly in o th e r r e sp e cts .

T hi s e x p er im e nt a l w o rk is to b e c o ntinu ed T h e .

Sa gam o r e Tr a ct o r n o w is w e ll s u it e d f o r u se o n l ar ge
fa rm s in n u m er ou s s ecti o ns o f th e cou ntry I t is .

d ou btf u l h o w e v e r if this tract o r can b e u s e d a t th e

, ,

p r e s e nt ti m e e co n o m i ca lly o n f arms b e l o w a ce rt a in

siz e an d u n d er c ert ain c o n d iti o ns .

I n its ad ve rtisin g an d s a l e s w o rk sh ou l d t echni ca l

,

inf o rm ati o n r egar d in g th e c o nstru cti o n o f th e tr a ct o r

b e p r es ent ed t o th e fa rm e rs w h o ar e p r o sp e ctiv e cu s
tom er s ? Sh ou l d this t e ch n i ca l info rm a ti o n b e s p e cifi c
o r ge n e r a l in ch a ract e r ? Wh at info rm ati o n sh ou l d th e
Sa gam o r e Tr a ct o r C o m pa ny u n d ert ak e to giv e t o
farm ers r ega r d in g th e a ct u a l p e rfo rm an ce o f its
p r o du ct ? Sh o u l d th e Sa gam o r e Tr act o r C o m p a ny
a d vis e fa rm e rs in a n y way r egar d in g th e lim it a ti o ns

u p o n t h e u s e o f its tr a ct o r ?

Wh a t a d vi ce a n d s e rvi ce can fa rm ers wh o p u r ch as e

Saga m or e Tr a ct o rs f a irly e xp e ct t o r ece iv e fr om th e
m a n u fact u r er ?
 PA R T I I I

R E TA I L T R AD E l

H E SE p r o bl em s i ll u stra t e th e fu n cti o ns m eth o d s ,

e xp e ns e s a n d s o m e o f t h e co mm o n m a n a ge m e nt
,

p r o bl e m s O f r e t a il m e r ch a nts in c l u d in g u nit ,

st o r es co m p a ny st o r es r et a il wh o l es a l e DUS ln e SSC
, ,
-
'

’
d ep a rt m e nt st o r e s ch a in st o r e s m a n u fa ct u r ers r et a il , ,

br an ch e s m a il o r d er h ou s es coo p er a tive st o re s p u bli c

, , ,

m a rk e ts w ago n r e t a il e rs an d b u lk r e t a il ers
,
Pr o bl em s ,
.

in th e s e l ecti o n o f th e typ e o f r e t a il o u tl e t t o b e e m
p l o y e d by a m a nu fact u r e r or o th e r p r o d u ce r a ls o a r e
illu stra t ed .

16 R O AN O K E M A N U FA C T U R I N G C O M P A N Y
.

U N I T ST O R E S
A u nit st o re is a st or e with o u t a n e l a b o ra t e d ep a rt ,

m e nt a l o r ga niz a ti o n th a t is o wn e d a n d m a n a ged as ,

1 Ge n e r al r e fe re n ces o n r e t ai l tr a d e a r e : P H N s tr o m E con o m ics

y . .
,

of R eta i li n g a d R ta i l S to r e M a n gem e t P T C h e r gt o
e Ad na n . . . in n, ve r

ti s i n g as a B u s i ne s s For ce a d A d rtis i g B ook 1916 B u t le r De n ve n —

.
,

Bo we r a n d Jo es M a rk eti g M thod s
,
n A W Sh w S ome P robl ms
,
n e . . . a , e
of M a r ket Di tri bu ti o n J m es W E s k R t i l S lli g
s C lift o n C
. a .
,
e a e n . .

Fi e ld R eta i l B u yi n g W S am m o s K pi g Up W th R i i g Costs . . n ,
ee n i s n .

A . Sh aw C o m p a y H ow to R a S to r e t a P rofit M ki g You r
n ,
un a ,
a n

S tor e Wo r k Fo Yo A ttra cti g a nd H old i g C u to m rs a d M a ki g

r u, n n s e ,
n n

M or e Ou t of A d erti si g W R H o t ch ki v M l of S ucc s f l
n . . . n, . a n ua e s u

S to r ekeepi g C u rt is P u b lis h i g C o m p a y S ll i g Fo rc s
n . C om n n ,
e n e .

m er cial E co n o m y Bo ar d E o om y i R t i l S r vice B ur e a u o f ,
c n n e a e .

Bus i ess R e s e ar ch H ar v a r d U i e rsit y B u ll t S y tem of

“
n ,
No 2 n v ,
e
in .
,
s

A cc ou n ts f or S hoe R et l rs B u ll ti N o 3 S y t m of A c ou t s f
ai e ,
e n .
,
s e c n or

R ta i l Grocers ; B u ll t D p r ci a tio i n th R t l S hoe B us i

” “
e No 4 e in .
,
e e n e e ai
”
B u ll ti n N o 7 S y t m of S toc k k pi g f S ho R t il r s ”
“
n es s ; e .
,
s e -
ee n or e e a e ,

B u ll ti n N o 1 0 M a a g m n t P ro blem s i R t i l S ho Sto r s 1 9 1 3 1 7;
“ —
e .
,
n e e n e a e e ,

B u lleti n N o 1 1 S yst m f O p r ti g A c ou ts f o H rd w r R t i l r ;
.
,
e o e a n c n r a a e e a e s

B u lleti n N o 1 2 O p rati g E x p i R t i l H rd w r S to r
“
.
,
e 191 7
n e n s es n e a a a e es ,

B u ll ti N o 1 3 M a g m t P robl m s i R t i l Gr oc ry S tor “
1 8; e n .
,
an e en e n e a e es
B u leti N o 1 5 Op rat g A ccou ts f t J ry S t r ”
“
1 9 1 8; l n . R l w l,
e in n or e ai e e o es

B u lleti n N o O p rati g A ccou ts f o R t l D r u g S to re B ll t

“
. e n n r e ai s, u e in

Op er ati n g E x pe R t l G r oc ry S to r B u ll ti
“
N o 18 .
,
s i i 19 19 n se n e ai e es n
‘

e n

N o 20 . e a ti g E x p
,
s s i n R et i l S ho e S tor es i n
r n en e a

T he es o f b us m ess m a gaz i e s s u h as S y t m P r i ter s I k n , c s e ,

n
’
n ,

Adverti si n g a d S ell g c o n t ai n u m e r ou s a rt i cl s t h t a fl o d a l u ab le
'

n i n , n e a r v

su es t io n s o n t h e s o l u t i o n o f t h e p r o b le m s o f r e t a l tr a d e Fo r e h i

tr g ge fur t her m o re t here are sev eral tr ade pa pe rs

. ac

.
, ,

41
42 MARK E TIN G PR OB LE M S
an in dep e n d ent u nit fo r th e s al e o f goo d s thr ou gh
p e rs o n a l s a l e s m a nshi p I t is still t h.e m o st c o mm o n
typ e o f r e t a il st o r e in th e Unit e d St a t es .

T h e R oa n o k e M a nu fa ct u rin g C o m p a ny r ece ntly

p u t a n ew b akin g p o w d e r o n th e m ark e t This .

co m p a ny h a d s e v e ra l o th e r p r o d u cts th a t w er e s o l d

chi efly t o m a n u fa ct u re rs a n d l a rge s ca l e u s e rs T he -

.

n e w b a kin g p o w d e r w as th e first a rti cl e th a t th is

co m p a ny h a d m a n u f a ct u r e d f o r h ou s eh o l d u s e T he .

R o a n o k e M a nu fact u rin g C o m p a ny d e ci d e d t o s ell its

n e w b a kin g p o w d e r thr ou gh u nit st o r e s .

Wh a t ar e th e a d va nt a ges a n d th e d is a d va nt ages O f
this typ e o f m ark e ting o u tl e t for this p r o du ct ?
Wh a t m eth o d s can b e u tiliz ed by th e R oa n ok e
M a nu fact u rin g C om pany t o stim u l at e th e p rop ri et o rs
o f th e u nit st o re s t o t a k e a n a ctiv e int er e st in pu shin g

th e s a le of t hi s p r o d u ct ?

17 . F . K . WI LLI AM S -
C O ST OF D O I N G BU SI N E S S
M r F K Wil li am s o p era t e s a r e t a il h ar d war e st o r e
. . .

in a t o wn in N ew Ham p s hir e l H is b o o ks sh o w th e
.

fo llo win g e ntri es fo r th e y ear e n d ing D ecem b e r 3 1 ,

1 9 1 9 : n et in v e nt o ry o f m er ch a n d is e a t b eginni n g o f
y ea r n e t i nv e nt o ry o f m e r ch a n d is e a t e n d o f
year 7 n et sa l es , p u r ch as e s o f m er ch a n
dis c at b ill e d cost inwar d fr ei ght an d cart age ,

y B ul leti n
l See Bure au O f B usi n ess R es e ar ch Ha rv ar d Uni v ersi t
,

S ystem of O p rati g A cco t

,

s i n R etail H rd w r e S tor s ;
“
N o 11
.
, e n un a a e

O p erati n g E x pens es i n R eta i l H a rdwa r e S tor es , 1 9 1 7

“
u N o 12
.

o . 21 ,
“
Oper ati n g E xp ens es i n Re ta il Hard ware S tor es
i n 1 19 .
 R E TAI L TRA DE 43

cas h dis cou nts t ak en to tal e xp ens e

Wh a t w ere his p er ce ntages o f gr o ss p ro fit n et p ro fit,

a n d t o tal expe nse ? Wh a t was his ra t e o f s to ck t ur n ? -

18 . R O GE R S BR O W N —
C O ST OF D O I N G BUS I N E S S
R o ge rs Br o wn co n du ct a r et a il gr o ce ry st o r e in a
t own in P e nn sylvani a Th e ir st a t em e nt for th e yea r
.

e n d in g D ecem b e r 3 1 , 1 9 1 9 , w a s a s f ollows z N e t —

s ales n et inv e nt o ry o f m er ch a n dis e J a n u a ry

1 , 1 9 19 , p ur ch a s e s o f m er ch an d is e a t bill e d
co st inwa r d fr ei ght a n d cart age $ 382 ; cash
d is cou nts t a k en $ 207 ; n et inv ent o ry o f m er ch an d is e
D ecem b e r 3 1 , 1 9 1 9 , w ages o f s a l e s f o r ce
a d v e rt isin g $ 1 7 ; wr app in gs a n d o th e r s e llin g

e xp e ns e $ 3 73 ; wa ge s o f d e liv ery f o r ce o th e r

d eliv e ry ex p e ns e $ 7 93 b u yi n g, m a n agem e nt a n d O fli ce
sa l a ri es O ffice s u pp li e s , p o st a ge , a n d o th e r

m a n agem e nt ex p e ns e $ 92 ; r e nt $ 7 50 ; h ea t , light , an d
p o w e r $ 2 7 6 ; t a x e s $ 9 7 ; ins u r a n ce $ 200 ; r epa irs o f
st o r e e qu i pm ent $ 1 58 ; d ep r eci a ti o n o f st o r e e q u i p
m e nt $ 23 1 ; int er e st o n cap it a l b o rr o w ed $ 9 7 int e r est
—

o n ca p it a l
—
o wn e d $ 606 ; m is ce ll an e ou s e x p en s e $ 3 94 ;

l o ss es fr om b ad d ebts $ 1 34 .

T h e p r op ri et o rs o f t hi s st or e b eli e v e th a t th eir
b u s in e ss m i ght b e m ad e m o r e p r o fit abl e Wh a t s u g
.

ge sti o ns sh o u l d b e giv e n th em f or a n a lyzin g th e ir

b u s in e ss in o rd e r to l earn h ow it m ay b e ma d e t o Sh o w
gr e a t er p r o fits ?
44 MARK E TIN G PR OBL E M S
19 . B UR N SI DE C LO T H I N G C O M PAN Y —
FLAT M AR K -
UP

T h e Bu rnsi d e C l o thin g C om pa ny h as a st or e sit u a

t ed in a s u b u rb O f C hi ca go This s u b u rb h a s a p o p u la
.

ti o n o f a b ou t p eop l e . Thre e n e i ghb orin g s u b

u rb s h a v e a p o p u l a ti o n o f a b ou t e a ch
. Th es e
s u b u rbs ar e l o cat ed a b o u t 1 2 to 1 5 m il es fr om th e cen
t er o f th e c ity . T h e thr ee s m a ll e r s u b u rbs h a v e e l ec
tri c car s e rvi ce t o th e l arge s u b u rb , whi ch in t u rn is
co nn e ct e d with th e c ity by st eam a n d e l ectri c lin es .

T h e a nn u a l s al e s o f this r e t a il st o r e , whi ch s ells

’
m e n s sh oe s a n d m e n s c l o thin g, a r e a b o u t
’

r o u ghly o n e th ir d sh o es , a n d tw o thir d s c l o t h in g O f
- -
.

th e sh o e s s o l d a b o u t 6 5% r e t a il f o r p er p a ir ,
( 1 9 1 8 p ri ces ) , a b ou t 25% f o r l e ss a n d a b o u t 1 0% f or
m o r e th an th a t fi gu r e . This st o r e c om p et e s a t p r e s ent
m a inly with s m a ll e r s u b u rb a n st o r e s in m e d i u m a n d
lo w p ri ce go o d s a n d with l ar ge c ity st o r e s i n m e di u m
-

a n d hi gh p ri ce goo d s
-
. T h e s a l e s o f th e sh o e d ep a rt
m e nt o f this st o r e n ow yi e l d a n a v e r age gr o ss p r o fit
of

T h e p ro p ri e t ors O f this st o r e p rop o se in th e f u t u r e

to s ell a ll sh oe s at a flat gr o ss m ark u p o f -
p er p a ir .

For e x am p l e , a p a ir o f sh o e s co stin g th em w ou l d
b e s o l d at r e t a il in this st o r e u n d e r th e n ew p l a n a t
Thi s p o li cy th ey p r op o s e t o m ak e th e m o st
co nsp i cu ou s f ea t u r e O f th eir a d v ertisin g . Th e y a ls o
r
p p o o s e t o p r e s e rv e th e q u a lity o f th e ir g oo d s
. T h e

m a rk u p on cl o thi ng w o u l d c o ntin u e a s at p r e s e nt
-
.

Wh a t p r ob ably w o u l d b e th e e ffect o n th eir trad e

o f t h e a d o p ti o n o f s u ch a p oli cy ? I s it ad vis able f o r
th em to ad opt it ?
 R E TAI L TRA D E 45

20 . TR I P O D R E TAI L GR O CE R Y CO M P A N Y —
THR E E
WA Y P L A N
T he Tri p o d R e t a il G ro ce ry C o m p a ny o p e ra tin g a
hi gh cl ass r et a il gr o ce ry st o re s e llin g b o th st ap l e go o d s
,
“
a n d f a n c y gr o ce ri e s a d o p t e d th e s o ca ll e d
,
-
thr ee w ay -

”
p l a n in N o v em b e r 1 9 1 7 t o m ee t war c o n d iti o ns
, ,
I ts .

go o d s w e r e a ll p ri ce d o n a ca sh n o n d e live ry b asis
-
.
,

For d eliv ery a n e xtra ch ar ge w as m a d e a n d a n y cu s

.
,

t o m e r w h o d es ir e d a cr e d it a cco u nt w as r e q u ir e d to
p a y a Sp e cifi c a m o u nt m o nthly f o r th a t s e rvi ce .

T h e co m p a ny o p er a t e d s e v e r a l br a n ch e s a n d its
s a l e s w e r e u p w ar d s O f h a lf a mi lli o n d o ll a rs a y ea r .

D u rin g t h e wa r this c h a n ge in p o li cy w a s s u ccessf u l ; it

e n a bl e d t h e co m p a ny t o o p e r a t e with f e w e r e m p l o y e e s

a n d t o p ri ce its g o o d s a t l o w e r fi gu r e s I t a ls o a i d ed th e
.

co m p a ny in m e e tin g ch a in st o r e co m p e titi o n A lth o u gh

.

s e v e ra l c om p e tin g u nit st o r e s tri ed this t h r e e way p l a n -

,

few o f th em a d h e r e d t o it f or a n y l e n gth o f ti m e .

Wa s it a d visa bl e for this c o m p a ny to co ntinu e t o

u s e t h e t h r ee w a y p l a n a ft e r t h e e n d o f th e war ?
-

21 . M O N A DN O CK FO O D P R O DU C T S C O M P A N Y
D E A LE R H E L P
T h e M o n a d n o ck Fo o d Pr o d u cts C o m p a ny is c o n
s id e r in g t h e a d o p ti o n o f s o m e p l a n o f d e a l e r h e l p , in

o r d e r t o str e n gth e n its p r e sti ge a m o n g t h e r e t a il m e r

ch a nts wh o s ell its p r o d u cts T h e c o m p a ny p r o d u ce s

.

hi gh gra d e ca nn e d go o d s I t e m p l oys s p eci a lty s a l e s

-
.

m en f o r s o li citin g d r op shi p m e nt o r d ers fr o m r e t a il e rs

-
.

O n m a kin g inq u iry , it h a s f o u n d th a t o n e l a rge fir m

o f wh o l e s a l e rs in th e h a r d w a r e tr a d e h as o n e m a n o n

its st aff wh o d e v o t e s p ra c ti cally all his a tt enti o n to

46 MARK E TIN G PRO BLE M S
ad vising r et a il cu st o m ers r egar d in g th eir p ro bl em s in
st o r e m an agem e nt a n d in k eep in g th e ir a cco u nts .

B u tl er B r o th ers ca t al o gu e wh o l es al ers in C hi cago

, ,

fu rnish a d v i ce to p r o sp e ctiv e cu st om ers r egar d in g

a dv a nt a geo u s l o ca ti o ns f o r o p e nin g n ew v a ri ety st o re s .

B u tl er B ro th ers a ls o a ssist th e ir cu st om e rs in p la nnin g

s p eci a l s a le s an d in ge ttin g o u t st o r e p ap e rs Th e y .

a rra n ge t o f u rnish p ri ce ti ck e ts win d o w car d s an d

, ,

o th e r f ea t u r e s th a t a r e n ecess a ry f o r sp e ci a l s a l es .

The y a ls o p repa re an d fu rni sh cop y for cir cu l ar s an d

s al es a nn o u n cem e nts .

J o hn Lu ca s a n d C om p a ny pa int m a n u fact u r ers o f

,

Phila d elp hi a h a v e a dop t ed a p l a n whi ch th e y call

,
“ ”
1 00% Se llin g wh er eby e ach cu st om er wh o is
,

int er e st ed is giv en a list o f q u e sti o ns t o a nswer 1 .

Th es e q u esti o ns ar e e xp ect ed to in d i ca t e th e str o n g

p o ints o f th e r et a il e r in m a n agin g his b u sin ess an d
a ls o t o s u gge st th e o pp o rt u ni ti e s fo r im p r o v in g his

m e th o ds . Th e y co v e r a ccou ntin g m eth o d s an d e sp e

cially s elli n g p o li ci e s a n d m e th o d s O f in cr ea sin g s al es .

T h e Sh e rwi n William s C o m p a ny o f C l e v e l an d ,
-

’
p aint m anu fac tu r e rs h a v e a r e ta il ers s ervi ce d ep ar t
,
2
m e nt whi ch f u rnish es a d vi ce to cu st om ers r egar din g
accou ntin g ,
disp l ay an d o th er p r o bl em s th at aris e
,

fr equ ently in th es e st o r es Se v e r a l o th e r m anu fact u r ers

.

in v ar iou s in d u stri e s h av e a d op t e d sim ilar p l an s for

“ ”
dea l er h e l p 3 .

Wh a t p la n o f d ea l er h e lp is lik e ly to p r o v e m o st
eflectiv e for th e M o n a d n o ck Fo o d Pr o d u cts C om p a ny ?
'

1Joh n Lucas Co , 1 00 % R etai l S elli n g

. .

2 Fr ed e ri ck C K uh n “ How t o E s t ablis h an d C arr

.
, y O n a n E ff ect iv e
Se rvi ce D e par t m e n t for Re t ailers , P r i n ter s I n k , Feb r u ar y 8, 1 9 1 7 ,
’

pp 3
.
-
12 , 1 0 2-1 0
6 .

1’*Se e also P T C h eri ngto n , A d vertis i ng as a B us i nes s For ce,

. .

K en d all Bann in g, Why He Los t My T r ad e, System ,

“ ”
p 1 27 1 55
.
-

un e, 1 9 1 6 , pp 6 28-6 35
. .
 R E TAI L TRA D E 47

22 . G E O R G I AN C L O TH I N G C O M P AN Y
E X C LU S I V E A G E N C Y
T h e G eo r gi a n C l o thin g C o m p any o f N ew Y o rk
C ity h as b ee n d e v e l op in g l e ad ershi p in th e styl e a n d
’
q u a lity o f th e b o ys cl o thi n g th a t it m anu fa ct u r e s .

T h e co m p a ny h a s d e ci d e d t o a d op t a syst em o f e x cl u
siv e a ge n ci e s thr o u gh o u t th e Uni t ed St a t e s for th e
s a l e o f its p r o d u ct O n e r et a il e r in e ach c ity o r t o w n
.

will b e g iv e n th e s o l e ri ght to s e ll its p r o d u ct in his

t e rrit o ry T h e p ro d u ct is to b e br a n d e d a n d a d v er
.

tis e d by th e m a n u fa ct ur e r Su ch a d v ertisin g as
.

r e t a ile rs u n d ert ak e w ill b e o n th eir o w n accou nt .

Wh a t ar e th e a d va nt ages a n d th e di s a d va nt age s to
th e G eo rgi an C l o thin g C o m p any o f u sin g this syst em
o f e x c l u siv e a ge n ci e s ? 1

M r W K Sm ith , who op era t es a cl o thin g st o r e in

. . .

o n e o f th e l a r ge r c iti e s , h as b ee n giv e n th e o pp o rt u nity

to b ecom e th e e x cl u siv e agent f o r th e G eo r gi a n C l o th

in g C om p a ny in his t errit o ry Wh a t w ou l d b e th e
.

a d va nt a ge s a n d th e d is a d v a nt age s t o him o f th e
e x cl u siv e a ge n cy p l a n ?

23 . P E N W I CK CO M P AN Y —
E X C L U SI VE A GE N C Y
T he P e nwi ck C om p a ny O p era t es a la rge r e t a il a n d
wh o le s a l e gr o ce ry b u s in ess in Phila d e l p hi a I t s p ec i a l .

iz es in fa n cy gro ceri e s an d im p o rt ed go o d s s o l d u n d er its

o w n br a n d s I t a ls o s e lls l a rge q u a ntiti es o f st ap l e
.

gr o ce ri e s T h e tr a v e lin g s a l e s m e n f o r its wh o l es a l e
.

d ep a rt m e nt co v e r a t e rrit o ry o f a b o u t 3 00 m il es r a d i u s
fr om Phi l ad elp hi a .

R o lan d Hall, N at io nal Ad v e rt ise rs E st im a t e Val u e o f

“
1 S .

E xcl us ive Age n cies , P ri nte r s I n k , Se p t e m b e r 4 , 1 9 1 3 , p p 3 1 1

’
-
. .

M Z im m er m a n , An I n v est igat o r s Re rt o n E xcl us iv e Age n c ies ,

.
“ ’

P ri n te r s I n k , A pril 30 1 9 14 pp 37-4 7 ay 7 1 9 14 , p p 8 4- 9 2 M a
’

y 28'
‘ '
. .

1 9 1 4 , pp 7 6-8 4 . .
48 MARK E TIN G PR OBLE M S
M r J K L aws o n wh o op erat e s a gr o ce ry s to re in
. . .
,

a t o wn in N ew J e rs e y , h as r e q u e st e d th e ex cl u siv e

age n cy fo r P e nwi c k goo d s in his t o wn T h e t o wn .

wh e r e his st o r e is l ocat e d h as a r esi d ent popu l a t io n o f

2200 . D u ri ng th e s u m m e r m o nths th e popul a ti o n is
in cr eas e d by the infl u x o f o v e r 1 000 p e op l e each yea r ,

fr om Phil ad el p hi a , N ew Y o rk a n d o th e r c iti e s Th es e .

s u m m e r visit o rs ar e w e ll to do a n d m a ny o f th em o wn
- -
,

co tt a ge s a n d s u m m er h o m es in this t own Th er e is .

a ls o a l a rge s u mm e r h o t e l in th e t o wn I n ad d iti o n to
.

th e Laws o n st o r e th e re ar e thr ee o th e r gr o ce ry s t o r es .

Th es e o th er st o r e s a r e l ess a ttra ctiv e in app ear an ce

a n d p oor er c r e d it r isks T h e Lawso n st o r e is u n qu es
.

tio n ab ly th e b e st an d it h as a goo d c r ed it r a tin g

, .

T h e P e nwi ck C om p any h as s o l d t o a ll th es e s t o r es
in th e p ast I t als o h as s o l d d ir e ct t o th e h o t el T h e
. .

ret a il b r an ch o f the P e nwi ck C om p any fu rth e rm or e , ,

ship s m a il o r d e rs by exp r es s dire ct to cons um e rs in

this t o wn d ur in g th e s u mm e r O th er wh o l e sa l e gr o ce rs
.

in P hila de lp hi a an d N ew Y o rk comp e t e for o r d e rs fr om

r e t a il e r s an d th e h o t e l .

T h e P e nwi ck C om p a ny n e v e r h as gr an t ed e x cl u siv e
age n ci es . I f this r e qu e st o f M r Laws o n is gr ant e d it
.
,

w ou l d b e for an in d e fini t e perio d whi ch c ou l d b e

t e rm in a t ed at will b y e ith er par ty T h e P e nwi ck
.

C o m p a ny fu rt h erm o r e w ou l d n o t b e o b li ged t o d is
, ,

co ntin u e it s s a l e s t o t h e h o t e l o r t o r e fu s e th e a ccep t a n ce

o f m ai l o r d e rs d ire c t fr o m c o n s u m e rs .

Sh o u l d th e P e nwi c k C om pa ny gr a nt M r Laws o n .

the ex clu siv e age n cy ?

 R E TAI L TRA D E 49

24 . I R O N ST O N E C O M P AN Y —
SA LE OF ST O C K TO

C US T O M E R S
T he I ro nst o n e C o m p a ny with a s m a ll p l a nt in
,

P e nnsylva ni a m an u fa ct u r e s h amm ers T h e co m p a ny

, .

h as a w e ll e st a blish e d r e p u t a ti o n
-
I ts ann u a l s a l es
.

a m o u nt t o I ts p r o d u ct is s o l d t o a b ou t o n e
fifth o f th e h a r d wa re st o r e s in th e Unit e d St a t es T h e .

Iro nst o n e C om p a ny n ow p r op o s es r e orga ni z a ti o n T h e .

m a in f ea t ur e s of th e p l a n a r e a st o ck co m p a ny w ith
—

a ca p it a li z a ti o n o f p r e f e rr e d a n d
co mm o n ) T h e co m m o n st o ck is t o b e ab
.

s orb ed by th e p re s ent co m p a ny fo r th e p la nt a t a p
p r a is e d v a l u e a b o u t
, a n d th e r e m a in d er f o r

tra d em ark go o d will a n d s e llin g ri ghts T h e p r e f e rr ed

, .

st o ck is to b e o ff er e d t o th e h a r d w ar e tra d e e x cl u siv e ly
( in cl u d in g b o th r e t a il e rs a n d wh o l e s a l e rs ) T h e pre .

f e rr ed st o ck is t o b e iss u e d in $ 1 00 sh a re s T h e m ini .

m u m h o l d in g is t o b e $ 200 E a ch p r e fe r r e d st o ck
.

h o l d er is to h a v e e x clu siv e l o ca l ri ght t o o w n st o ck a n d

t o s e ll this p r o du ct T h e p r e f err e d st o ck is p a rti ci
.

p a tin g v o tin g b u t n o t cu m u l a tiv e

, ,
All earnin gs ab o v e
.

7 % o n th e e ntir e cap it a l a n d a s u it a bl e r e s e rv e a r e
, ,

t o b e d ivi d e d e q u a lly a m o n g b o th kin d s o f st o ck T he .

b u sin e ss o f th e Ir o nst o n e C o m p a ny is to b e ex p an d ed ,

if t h is o rga niz a ti o n is s u ffi ci e ntly s u ccessfu l t o m a n u ,

fa ct ur e a n d s e ll o th e r h a rd w are p ro d u cts .

M r W K B a rl o w a h a r d wa re r e t a il er h as b ee n
. . .
, ,

o ff e r e d th e o pp o rt u nity t o b e co m e th e e x cl u siv e st o ck

h o l d e r o f th e I ro nst o n e C o m p any in his c ity Mr . .

B arl o w o p era t e s a r et a il h a r d w a r e st o r e with a nn u a l

sa l es o f T h e b u sin ess is th a t o f a t yp i ca l h a r d
w a r e r et ail er a n d sh o ws a b ou t th e a v e r age p r o fits .

Wh a t m u st M r B a rl o w co nsi d e r in d e ci d i u
.

wh e th er o r n o t to pu r ch a s e this st o ck ?
 50 MARK E TIN G PR O BLE M S
25 . P E N SA CO L A I R O N WO R K S —
C O M PA N Y ST O R E
T h e P e ns aco l a I r o n Wo rks , whi ch e m pl o ys a b ou t
m en , h as b e e n r eq u e st e d by a co m m itt ee o f
e m p l o y ee s t o e st a blish a st o r e 1 f o r th e s a l e o f f o o d

p r o d u cts I t is p r op o s ed th a t th e m er ch a n d is e sh o u l d
.

b e s o l d a t p ri ce s th a t w ou l d co v e r th e wh o l e sa l e c o st
p l u s th e a ct u a l O p era tin g e x p e ns e s o f th e st o r e T he .

P e nsa co l a I r o n W o rks w ou l d a ss u m e th e r es p o nsibility

for th e m a n age m e nt a n d O p er a ti o n o f t h e st o r e .

T h e p l ant o f this co m p a ny is l o ca t e d in th e s ou th e rn
p a rt o f a c ity o f p o p u l ati o n Th ere ar e goo d
.

stree t car co nn ecti o ns b e tween th e p l a nt a n d o th e r

p a rt s o f th e city T h e st o re , if o p e n e d , w ou l d b e
.

l o ca t ed c l o s e by th e m a nu fa ctu rin g p l ant or in o n e o f

its wa r eh o u s es .

A t th e p r es e nt t im e th er e ar e ab ou t a d o zen r et ail
gr o cery st o r e s in th e c ity Th es e st o r es a r e op e r ating
.

u n d e r ty p i ca l c o n d iti o ns .

Sh o u l d t h e com p a ny co m p ly with this r e qu e st ?

26 . M AN I T OW O C HAR DW AR E C O M PAN Y —
R E TAI L AN D
WH O LE SA LE ST OR E
T he M a nit o wo c H ar d wa r e C om p a ny op era t e s a
l a rge re t a il h ar d wa r e st o re in Wis co nsin T h e a n n u al .

s a l e s o f t hi s com pa ny ar e app ro xim at e ly

1 N um e r o us c o m an
p y st o res o f t his sor t h ave b een est ablish e d
d ur in g t he las t fe w years b y i n d ustr ial a n d p u b lic s er vI ce co m pa m es .

T h e I n t er b or o R a pid T r a ns i t C o m pa y for e xam ple es t ab h s h ed a

n , ,

st o r e i n N ew Y o r k C it y whi ch was s u ccess ful for a fe w m o n t hs b u t ,

whi ch t h er ea ft er l o st it s p atr o n a ge a n d t h e c o m pa n y p losed I t T he

.

Am e ri ca n Woo le n C o m p an y e s t ab li sh e d a st o r e a t I t s mi lls I n La wr e nce ,

M as s ach us e tts i n 1 9 1 9 i n or d er t o r e d u ce t he c ost o f li vi n g acco r di n g

, , ,

t o t h e p ub lish ed st at em en ts .

I n addit io n t o t he se c o m pa n y st o r es o f r e ce n t o ri gi n , t h ere are

0

al s o a s u b st a n t ial n um b e r o f c o m mi ss a r i es o pe r a t ed b y m i m n g co m

pa ni cs l um b er c o m p a ni es
, , and sim ilar e n t er pri ses Th e c o mm i s
.

s eries ar e gen er ally o per at ed wi t h a vi e w to sh owi n g a n o mi n al pr ofi t .

 R E TAIL TRA D E 51

T h e com pa ny h as th e e x cl u siv e agen c y in its te rrit o ry

for a wi d e ly a d v e rtis e d br a n d o f p a in t , whi ch it b u ys
d ir e ct from th e m an u f a ct u r er I t a lso b u ys s o m e o th e r
.

p r o du cts d irect fr o m m a n u fact ur e rs , b u t fo r a l ar ge

p o r t i o n o f its p u r ch a s e s it fin d s it n e ce ss a ry t o go t o

wh o l e s a l ers T h e co m p a ny s b u sin e ss h as b ee n st ea d ily

.
’

e x p a n d in g, a n d th e co m p any is in a str o n g fin a n c i a l

p o siti o n T h e t o wn in whi ch th e st o r e is l o ca t ed is
.

s u rr ou n d e d by a ri ch a gri cu lt u ra l c ou ntry a n d n ew in
d u s tr ia l e nt e r pris es ar e b e in g st a rt ed fr o m ti m e t o t irn e .

A l th o u gh th e M a nit o w o c H a r d wa re C o m p a ny h as
n o s p e cifi c g rou n d s f o r co m p l a int a ga in st th e wh o l e

s a l e rs fro m wh o m it pu r ch as e s , it b e li e ve s th at it m i ght
b e abl e t o s e cu re s om e s a vin g in its p u r ch a s es if it w ere
a bl e t o b u y dir e ct T h e c o m p a ny th e r ef o r e is co n
.

s ider in g th e e st a blish m e nt o f a wh o l e s a l e b u sin ess t o

b e o p e ra t ed j o intly with its r e ta il st or e .

Wh a t sp ecifi c p ro bl em s wi ll th e M ani t o woc H ard

war e C o m p a ny e n cou nt e r ,
l if it d o e s a tt em p t t o
o p e ra t e a r e t ail- wh o l esa l e b u s in ess ?

27 . C HA T HA M CO M P AN Y—
DE PAR TM E N T ST O R E
A d ep art m ent st o re a cco r d in g t o th e c u st om ary
,

u s age o f th e t e r m is a r e t a il st o r e o rga niz e d o n a

,

d ep a rt m ent a l syst em in whi ch o n e o f t h e l ar ge d e

p art m e n t s is d r y go o ds .

T h e C h a th a m C o m p a ny a d ep art m e nt st o re lo ca t
,

ed in o n e o f t h e l a r ge c iti es h as a n a nn u a l v o l um e o f
,

s a l es o f I ts o p era t in g ex p e ns es ar e
1 See Ar t h u r C o b b Jr C ur b in g t h e R et ailer s Jo bbin g Am bi
’
, ,
.

P r in te r s April 29, 1 920 , p p

0
’
ti o ns , I n k, . 10 5- 1 1 5 .
52 MARK E TIN G PR OBL E M S
a pp or x im a t e ly a y ea r I t is a typ i cal .

d e p a rt m e nt st o r e .

Wh e re in lie its chi e f a d va nt ages in co m p etiti o n

with o th e r typ e s o f r e ta il e st ablish m e nts ?
T h e f o ll o win g st a t em ent was m a d e in an e d it o ri a l
in a b u sine ss m aga zine in 1 9 1 7 :

T h e pri n ci p a l tro u ble i s th a t the dep artm e nt st or e i s

t o p -h e avy It is b u r d en e d wi th a n u nwi el d y s ervi ce syst em
.

t h at f ro m v ery s im p l e b egin ni n gs has gr own t o b e s o l u x u rio u s

a n d s o wa s t ef u l t h a t it s a p s t h e e ffi ci e n cy o f t h e st o r e .

Bu t tho u gh thi s a m a zingly r am ifie d gr at u it o u s s e rvi ce

m ay b e b u rd e n s o m e , it s eem s t o b e a b s ol u t e ly es s e nti al to
t h e d epart m e n t s t or e , a s at pr e s ent c o n d u ct e d It is t h e
.

s t o r e s gr e a te s t a ss e t t h e m i s on d etr e f or thi s sy s t em o f
’ ’
—

retailing I n t h e fir s t ye ar s o f t h e d e partm e nt s t or e , e conom y

.

w as it s chi ef a p pea l a n d c o u l d h ave b ee n m a d e tr u thf u lly .

Thi s i s n o l o nge r t h e ca s e .

T h e d e part m en t st or e i d ea c am e int o exi s t ence in thi s

co u n try in t h e p ri ce r e a d j u s t m e nt p eri o d f o ll o wing t h e C ivi l
War At that tim e t h e p ri ce s o f ne arly a ll co mm o d iti es
.

b ega n t o d r o p C o m petiti o n b ecam e k ee n a n d t h e O ld

.

s cho o l o f re t ailing wa s s orely tri ed N ew m eth o d s o f s elling

.

ca m e int o v o gu e G r ad u ally t h e p l a n o f b u yi n g f o r ca s h ,
.

s elli n g at a s m all profit a n d t u rni ng goo d s r ap i d ly ca m e int o

“ ”
b e ing .T h e s al e b e ca m e p o pu l ar It was in thi s peri o d
.

that a gre at i m p et u s w a s given t o pro d u cti o n , owing t o t h e

wi d es prea d a d op ti o n o f m achinery in m an u fa ct u ring Bu t .

there were n o well e s t ab li shed chan nel s o f d i s trib u ti o n at

-

thi s ti m e a n d m anu f act u r er s d id n ot kn ow h ow t o cr e at e

m ark et s a s they d o n ow C on seq u ently o ver pr o d u cti o n
.
-

o ft e n r e s u lt e d G o o d s h a d t o b e s o l d t o t h e b e s t bi d d er
. .

The s e c o nd iti ons fa vo r ed t h e pri ce- s elling m etho d s o f t he

d epartm ent s t o re a n d f o s t er ed it s gro wt h .

Th en , gr a d u ally , t h e i d e a o f trad e-m arki n g b egu n t o

s pre ad A dverti s ing gave b ran d ed arti cl e s a nati o n a l s tand
.

in g . D istrib u ti o n w as s t an d ar d iz ed , a n d a dverti s i n g m an u
f act u r er s wer e n o lo n ge r a t t h e m er cy o f s e ll er s Th i s
.

m o vem en t t owar d t h e n ati o naliz a ti o n o f m er ch an di s e h as

b ee n go i n g o n f o r thirty year s M an y d e partm en t s t or es
.

have a lways o p po s e d it E ven to d ay m u ch o f their a dv er

.
-

t is in g a n d m er cha n d i s i n g i s b a s ed o n t h e o ld m eth o d s t h a t
pr evail e d wh e n m ar k et s wer e d em or aliz ed an d when m anu
f a ct u r ed a rti cl es h a d n o i d e ntity a n d n o st an ding with t h e
p u b li c Wo rk i n g a s they a r e a gain s t t h e c ur rent in dis
.

t r ib u tion , is it an y wo n d er tha t d ep art m ent s t o r es hav e

fo u n d t h e a d o pti o n o f u n li m it ed s ervi ce s o e ss enti al t o their
e xi s t en ce ?
 R E TAI L TRA DE 53

Wh a t rep ly t o this st at em ent sh ou l d b e m ad e by

th e p r e si d e nt o f t h e C h a th a m C o m p a ny .

28 . O R C H A R D C O M P AN Y— SCR I M C UR T AI N S
T h e E x e t e r C o m p a ny h as b e e n o r ga ni z ed t o e n gage
in th e m a nu f a ct u r e o f hi gh gra d e s crim cu rt a ins , th e
p l a nt to b e l o ca t e d in N ew Y o rk C ity T h e m anu
.

fa ctur in g ca p a city will b e a s l ar ge as th a t o f a n y

in di vidu a l co m p etit o r . C re d it r es o u r ces ar e a m p l e .

T h e typ e o f s a l e s o r ga niz a ti o n to b e f o rm ed d ep e n d s
u p o n t h e m e th o d o f d istrib u ti o n a d o p t e d .

Thr ou gh wh a t c la ss o f r e t a il st o re s can th e E x e t er
C o m p any e xp ect to s ell its p ro du cts t o th e b est
a d va nt a ge ?

29 . T I T AN C O M P AN Y —
ME N ’
S FUR N I S HI N G S
The Tit a n C o m p any whi ch m an u fa c t u r e s m en s ’
,

fu rn ishings h a s b ui lt u p a l ar ge m ark e t fo r its p ro d u c t

,

in th e E a st a n d M i d d l e W e st T h e b u lk o f its o u t p u t
.

h as b ee n s o l d u n d e r r e t a il e rs p riv a t e bra n d s t o d e
’
54 MARK E TIN G PR OBL E M S

p ar tm en t st o r e s .T h e co m p a ny is n o w co nsi d erin g
t h e p o ssibiliti e s O f d ev e l o p in g its tra d e in th e Sou th .

Wh a t ch a n ges in its s e lli n g p o li cy p r o b ably will b e

n e cess ary fo r th a t m ark e t ?

30 . LA U R E L C L O T H I N G C O M P A N Y ~
E X C LU S I VE A GE N C Y
T h e Laur e l C l o thin g C o m p a ny wish e s t o s ecu r e a n
ex cl u siv e a ge nt in a l a r ge ea st ern c ity T h e c om p a ny
.

h as a stro n g w e ll e st a blish ed r ep u t a ti o n fo r go o d
,
-

q u ality cl o thin g fo r m en in c o nse rva tiv e b u t u p to

,
-

d a t e styl e s . I t a d ve rtis es n ati o n ally H ere t o fo r e th e

.

co m p a ny h a s s o l d c l o thin g u nbra n d e d t o s e v er a l st o r e s

in this c ity N o w it wish e s t o h a v e its bra n d ed p r o du ct

.

f eat u r ed in this c ity an d h as d e ci d ed th a t s o m e s o rt o f

a n e x cl u siv e a ge n cy p l a n is d esira bl e .

I n this c ity th er e is a d ep a rt m ent sto r e o f goo d

r epu t ati o n whi ch h an d l e s c lo thin g b u t d o es n o t h a v e
,

th e e x cl u siv e age n cy fo r a n y m a n u fa ct ur er Th e r e ar e
.

a ls o s e v e ra l s m a ll c l o thin g st o r e s whi ch m i ght b e c o n

s id er e d f or a ge n c i e s.

Wh a t r ea s o ns fa v o r th e s e l ec tio n o f th e d ep art m e nt
st o re as th e e x clu siv e a ge nt ? Wh a t co nsi d er ati o ns
fa v o r s o m e o n e O f th e a v ail abl e sp eci alty cl o thin g st o r e s ?
 R E TAI L TRA D E 55

K SM I T H L AD I E S
’
31 . W . .
—
R E AD Y-T O WE AR
-

D E PA R T M E N T
’
M r W K Sm ith h a s o p era t ed a m en s c lo thin g
. . .

st o r e in th e sh opp in g d istri ct o f o n e o f th e la r ger c iti e s

o f t h e Unit e d St a t e s f o r a l o n g p e ri o d o f y ea rs T he .

n am e o f this st o re is w e ll kn o w n a n d it h as a w e ll
e st a blish e d c li e nt e l e I t ca rri es a f u ll lin e o f m e n s
.
’

a n d b o ys c l o thin g a n d f u rnishin gs T h e m e rc h a n d is e
’
.

th a t it s ells is o f go o d q u a lity a n d m ed i u m p ri ce d .

R e cently s ev e ra l d ep art m e nt st o r es in th e sa m e
d istri ct h a v e o p e n e d m e n s c l o thin g a n d f u rnishin gs
’

d epa rt m ents T o m ee t this co m p e titi o n it h as b ee n

.

su ggest ed th a t M r Sm ith sh o u l d e st ablish a d epart

.

’
m e nt fo r l a di e s gar m e nts a n d o th e r w ea rin g app ar e l
in his st o r e .

I s this like ly t o be a n eff e ctiv e m eans o f com p etiti o n ?

32 . SI E GE L C O M P AN Y
T h e Si egel C om p any w e nt int o b a nkru p t cy D ecem
ber 3 0, 19 14 T h e f o ll o win g s u bsi d i a ri es w e r e i n
.

v o lv e d z—
1 4 th Str ee t St o r e , N e w Y o rk ; Si m p s o n
C r a wfo rd , N ew Y o rk ; H e nr y Si ege l C o m p a ny , B o st o n ;
H e nry Si ege l C om p a ny ( b a nk e rs a n d wh o l esa l ers ) ,
N ew Y o rk ; M er ch a nts E x p r ess C o m p a ny , N ew Y o rk .

T wo o th e r s u bsi d i a ri es , op era ti n g d ep artm ent st or es ,

la t e r b eca m e inv o lv ed .

T h e st o r e o p er at ed in B o st o n w as o n e o f th e l ar ge st
d epa rt m e nt st o r es in t h e c ity Wh e n M r Si ege l w e nt . .

t o B o st o n , is w a s st a t e d th a t h e d e cl a r e d th a t h e w a s
willin g t o pa y fo r t h e go o d will o f a d ep a rt -

m e nt st o r e in this c ity He was n o t a bl e t o fin d a n

.

o pp o rt u nity to p u r ch as e ; th e ref o r e , h e b u ilt a n ew

56 MARK E TIN G PR O BL E M S
st o re whi ch was o p en ed in 1 9 06 a t th e co rn e r o f E ss ex
a n d W a shin gt o n Str e e ts s ev era l bl o cks d ist a nt fr o m
,

th e o th e r d e p art m e nt st o r e s o f t h e city I t w a s st a t e d .

th a t h e b e li e v ed th a t h e cou l d e s ta blish a go o d will by -

S p e n d in g th a t is h e ex p ect ed to l o s e
,

th e first yea r , th e s ec o n d y e a r a n d ,

t h e thir d y ea r b u t t o b e a bl e to S h o w a p r o fit
,

s o o n th e r ea ft e r I t was fu rth e r st a t ed th a t wi th s a l es
.

of h e fi gu r e d a l o ss b u t with s a l e s o f
,

000 a p r o fit .A s a m a tt e r o f f act it w as r ep ort e d a t ,

th e ti m e o f th e f a il u r e th a t th e s al e s n e v er h ad e x cee d e d
a y e a r a n d th a t in 1 9 1 2 th e n et p r o fit w a s
,

o nly

Wh a t fa ct o rs ap p are ntly w e r e giv e n ins u ffi ci ent

co nsi de ra ti o n in e st ablishin g this st o r e in B o st o n ?

33 . G R AN I T ED E P A R TM E N T ST O R E C O M P AN Y
FUR N I T U R E D E P A R T M E N T
M arch 2 1 , 1 9 19 .

B u reau o f B u s i n e ss R es ear ch ,

H arvar d Univer s ity ,

C am b ri d ge M a ss achu s e tt s
,
.

D ear Sirs :
O n e o f t h e m o s t f r u it f u l fi e l d s o f i n ve stigati o n wo u l d b e
t h at o f f u rni t u re a n d I a m pl acing thi s m att er b ef or e yo u
,

in t h e ho p e that yo u r d ep artm en t will t ak e u p t his b ra n ch

o f r et a ili n g a n d a tt e m p t a si m il a r r e f o r m SO f a r as t h e.

ret ail d epart m ent s tore s ar e co n ce rn ed I b eli ev e ther e is n o ,

d ep art m en t th at is l e ss s ci en ti fica lly m a n age d t ha n f u r

n i t ur e T h e t u r n o v er is very s m a ll t h e i n ve s t m en t i s very
.
,

large a n d t h e a m o u nt o f fl o or s p ace ne ce ss ar y for p ro p er

,

d i s p l ay r equ ire s a n e x pen dit ur e o f r en t t h a t in C l ev el an d

h as d riven all b u t t wo o f t h e i m p o rt an t f u rn it u r e d ep art m ents
o f t h i s city int o o u tlyi n g d i stri ct s .

What h as m a d e go o d O per ati o n in f ur ni t u r e d iffi cu lt h as

b e en t h e attit u d e o f t he avera ge d ep ar tm ent s t ore o wner .
 R E TAI L TRA DE 57

I n t he fir s t pl a ce t h e d epar t m ent s t ore pro pri et o r or m an

,

a ge r a s a r u l e i s n o t p ri m ar ily a f u rni t u r e m a n Hi s f ur ni .

t u re d epart m en t h as b ee n a l at er add iti o n t o his a lr ead y

s u b s t a n ti al growt h Seco ndly h e has h e s it at e d b e ca u s e o f
.
, ,

h is i gn o ra n ce t o a pply t h e p rinci pl e s o f s t o ck t u r n o ver a n d

,

m er c h a n d i s ing whi ch h ave b een s u cce ss f u l in his o the r

d e partm e n t s b e cau s e o f t h e r e pr e s e n t a ti ons m a d e by s o
,

m any in t h e f u rnit u r e fi e l d that a go o d t ur n ov er i s i m p o ss ibl e .

Third ly t h e char a ct er o f relati on s hi p whi ch e x i st s b e twee n

,

t h e f u rni t u re m a nu fact ur er a n d t he r et a il b u yer o f f u r ni t u r e

has b e en d eve l op e d in a w ay tha t i s n o t pr o d u ctiv e o f t h e
b e s t r e s u lt s T h e s emi an n u al f u r n it u r e s h o ws a t G ra n d
.
-

R a pi d s h ave ha d a t en d ency t o m ak e t he b u yer p u r chas e

l e ss freq u en tly a n d m ore in b u lk a t e a ch p eri od a n d d u e t o ,

t h e co m p etiti o n cr e at e d b y t h e m a nuf act u r er b etwe e n pr o s

pect iv e p u r ch a s er s o f f u rnit u r e a ll in t h e m ark e t a t t h e
s am e tim e t h e a verage b u yer h as e xhi b it e d a t end ency t o
,

o ver r each in hi s p u r ch as i n g
-
.

Bri e fly thes e ar e t h e p ri n ci pa l prob l em s with re s p ect t o

,

th e f u rni t u re b u s i n es s I a m wr iti n g yo u pri n ci pally

.

b e cau s e I b eli ev e th at t h e nu m b er o f d epartm ents in thi s li n e

tha t ar e m aking m o n ey i s a v ery s m a ll o n e a n d that a littl e
r eform in th e ri ght d ire ctio n wo u ld m ak e it po ss ib l e f o r a
large nu m b er of th em t o co m e o u t on t he right s i d e of t h e
l e dger .

Y o u r s v ery tr u ly ,

T h e Gran it e D e partm en t St or e C om pany ,

P r esi den t.

Wh at co nsi d era ti o ns o th e r th a n th o s e m e nti o n e d

,

in this l e tt er sh ou l d b e t a k e n int o a cco u nt by th e

,

c hi e f e x e cu tiv e o f a d ep a rt m e nt st o r e w h o is p r o m p t e d

to give esp eci a l a tt enti o n to his f urn it u r e d ep ar t m e nt ?

34 . L A P WI N G C O M P A N Y —
B U Y I N G SI L K G O O D S
T h e L a pwin g C o m p a ny , a d ep a rt m e nt st o r e in a
N e w E n gl a n d in d u stri al c ity o f o v e r p o p u la
ti o n , with a nn u a l sa l es o f h a d p l a ce d o r d e rs
58 MARK E TIN G PR O BL E M S
on N o v e m b e r 1 1 9 1 9 f or 50 % o f its s u pp ly o f silk , ,

p i ece go o d s fo r t h e c o m in g s prin g s ea s o n This w as in .

a cco r d a n ce with its ge n e ra l p o li cy o f o r d erin g a b o u t

o n e h a lf o f its s u pp ly a t t h e first sh o win g o f go o d s

-

by th e m a n u fa ct u r e rs .

T h e s a l e s o f t h e d r y go o d s d ep a rt m e nt in cl u d in g a ll ,

kin d s o f p i e ce go o d s th e n a m o u nt e d t o a pp r o xi m a t ely ,

55 % o f t h e t o t a l s a l e s in t h e st o r e .

I n vi e w o f th e co n d iti o ns in th e silk m ark e t o n

N o v em b er 1 1 9 1 9 a n d o f gen era l b u sin ess co n d iti o ns
, ,

in this co u ntry a n d f o r e i gn m ark e ts a t th a t ti m e th e ,

p r esi d e nt o f this st o r e h a d o cca si o n t o co nsi d e r wh eth er

h e S h ou l d im m e d i a t e ly in cr e as e his o r d e rs fo r silk p i e ce
goo d s fo r sp rin g d e liv e ry o r h o l d his o r d e rs a s th ey
st oo d p o stp o ni n g a d di ti o n al p u r ch as es u ntil l at er
, .

O n th e b a sis o f th e inf o r m a ti o n th en av ailable 1 wh a t ,

p o li cy sh ou l d h a v e b e en f o ll o w ed ?

35 . C HAI N ST O R E S
A ch ain st o r e syst em is a gr ou p o f s catt er ed st or es
with S in gl e o wn e rship a n d ce ntra liz ed m an agem e nt 2
.

M r C h ar l es K St e v e ns a fina n ci er with ext ensive

. .
,

pa pe rs s u ch as t h e A meri c a n S i lk J ou r nal Tex ti le Wor ld

1 See tr a d e
, ,

Jou rn al T exti les Tex ti le R ec or de r Dr y Goods E con o m is t Women s Wea r

’
, , , , ,

Da i ly N ews R ec or d N ew Yor k J ou rna l of C om me r ce ; als o C hi ttick

, ,

The S i lk I nd us try U S M on thly S u mma ry of C otton a nd Fi na nce

,
. .

S i lk M a n uf act u ri n g a n d I ts P ro blems U S M on thly S u m ma ry of , . .

Cotton a n d Fi a ce n n .

p ar t ic ul ar ly goo d d es c ri pti o n o f t h e o r ga ni z at io n o f t h e Uni t e d

2A

Ciga r St o r es is giv e n i n P T C h e ri gt o n A d erti sin g as a B us i nes s . . n ,

v

For ce p p 1 72 1 8 2
,
. A se ries o f a rt icles o n ch ai n st o r es t h a t a ppe ar e d
-
.

in P ri n te r s I n k ar e giv e n i n c o n d e ns e d f o r m i n P T C h eri gt o n
’
. . n ,

Ad ve rti si n g Book See als o G A N ich o ls Un it ed “

1 9 1 6 pp 229 286
—
,
.
-
. . .
,

R e t ai l St o r es I n v ad e M a n y Fields o f M e r ch a n disi n g
”
P ri n te r s I k
’
,
n ,

T h e Wi n ch est e r P la
”
Ap ril 1 5 1 9 20 p p 1 53 1 7 2 ; C P R us se ll
“
, , .
-
. .
,
n,

P ri n ter s I M arch 18 , 1 9 20, p p 7 7 8 4 , 1 9 3 1 9 6 ; J M G ri es , Li n e

’ “
n k, - -
. .

Y a r ds (Th e C h ai n St o ”
u
r e i n th e L m be r T r ad e) A me rica n I /um ber m a n ,
M ar ch 15 19 1 9 pp , ,
.
50-5 1 , M ar ch 2 2, 1 9 1 9, p 4 0, M ar ch 29, 19 1 9, .

p 38
. .
 R E TAI L TRA DE 59

e xp erien ce in wh o l e sa l e b u s in ess is co nt em p l a tin g a

,

s u bst anti al inv est m ent in a ch ain st o r e e nt erp ris e He .

d esir e s i nf orm a ti o n o n th e fo ll o win g p o ints

I n wh a t tr a d e s ar e ch a in st o r e s o p er a tin g?
Why is t hi s typ e o f o rgani z ati o n parti cu l a rly s u it e d
to th es e tr a d es ?
‘

Wh er e in d o es th e ch ain st o r e system h a v e a d v an t
a ges in co m p e titi o n with o th e r typ es o f r e t ail es t a b

lishm en ts ?
Wh at ar e its li m it a ti o ns ?

36 . P E T E R B R OWN C H A I N ST OR E S
J une 2 l s t , 19 1 5 .

B u r ea u o f B usines s Re s ear ch ,

H arvard Uni versity ,

C am bri dge M as s
,
.

G entle m en :
I am s eri ou s ly cons id ering t h e chain sto r e propo s itio n .

O u r fir m h as b een e st ab lishe d h er e f o r o ve r fif ty years an d

we h ave always h ad t h e r ep u t ati o n f o r go od q u ali ty Our .

d own t own st o r e is v ery com ple te a n d u p to —d a te in ev ery

- —

way . T h e fir s t o f th e y ea r I h a d t o t ak e h o l d O f t h e m an
a gem en t a s m y m an ager wa s n ot l o oki ng a ft er thi n gs I h ad
.

m a ny o ther int ere s ts a n d p a i d v ery little a tt en ti o n t o t h e

gr o cery b u s i n e ss . Sin ce I h ave t ak e n h o l d we hav e h ad
m u ch m ore e ffi ci e ncy in e very d ep art m e n t Y o u m ay b e
.

i n t eres t ed in kn owi n g o u r m o n thly e x pens e has b e en red u ced

1 5 % a n d o u r v o l u m e in cr eas e d o ver
In getti n g b a ck i n t o t h e har n es s I have agai n b egu n to
ge t i n t ere s t ed in t h e gr o cery b u s i n e s s I fi n d a ft er v ery
.

car ef u l c o n s i d e r ati o n t h e d o w n t o wn s t o r e i s l o s i n g its h o l d

-

a n d in l ar ge citi e s it will n ev e r b e t h e fa cto r it h as b e e n .

T h e e x pens e o f co n d u cting a co m pl et e t a b l e s u p ply h o u s e is

o u t o f a ll r eas o n in co m p a r i s o n with t h e m argin o f pro fit .

With o u r r ep u t ati o n a n d well k n own n am e w e co u ld es t ab

,

li sh o n e o r t wo h u n dr ed sto re s a n d I am s ure w e wo u ld
,

m ak e a wo nd erf u l sh owi ng .
60 MARK E TIN G PR OBL E M S
Very few m en have given th e s t u dy to t he grocery b usi
nes s that I have an d I thin k I am conver s a nt with every
,

phas e o f it f r om o ffi ce t o d elivery I e x p e ct t o in cr ea s e o u r
.

ca pit aliz ati on a n d get a b o u t n e w ca pit a l I am

.

s u re thi s i s a ll we ever will need a s n e w st or e s will t ak e care o f

them s elve s .

Thi s city pre s en t s a n e x ce pti onal o pport u n ity a s t h e chai n

n o w e s t abli sh e d h a n d l e s m o s tly i nf eri o r q u ality My i d ea
.

o f cha in st or e s is t o h a n d l e go o d q u ality a n d s e ll n o thi n g

that i s i nf erio r G o o d qu a lity d o es n ot neces s arily m ea n
.

h igh pri ce s It d e pend s o n t h e b u yer e n tir ely It wo u l d b e

. .

very S i m p le f o r m e t o ge t st art ed a s I have t he d own t own

,
-

s to re d o ing a n ann u a l b u s ines s o f o ver a wa r eh o u s e ,

a n d a v ery e ffi ci en t sy s t em I h ave a s tor e in Ind i ana p o li s

.

a n d h ave h a d st o r e s in o th er citi e s b u t h ave n o t h a d a

,

ch a in i n thi s city B ef ore tryi n g to i n t ere s t n ew ca pital

.

I am very a n x io u s to get d at a f r om o thers a n d if it i s p o ss ib le

,

I wo u l d lik e t o get i nf orm atio n o n t h e q u e stion s a tt a ched

heret o a n d will a p pr eci at e r e ceivin g an y inf orm atio n yo u
,

can give m e .

A ss urin g yo u that an y inf orm ati on that yo u can give

m e will b e h e ld stri ctly co nfi d en ti a l an d th an ki n g y o u f or
,

s ame I am
,

Yours very tr u ly ,

( s i gned) P et er Br own
How m u ch cap it a l is n ecessary t o co n d u ct M ain
st ore a n d 20 Br a n c h e s m a in s t or e d o in g a b u sin ess o f
,

p er a nn u m o f whi ch ,
is fr esh m ea ts ,

fru its an d v ege t abl e s d airy a n d b a k ery ? A st o ck o f

,

w ou l d b e a ll th a t w ou l d b e n e cess ary f or this

M a in st o re if wa r eh ou se s u pp li e d st o ck d a ily
’

How m u ch st o ck is it n e cess a ry t o ca rry in e ach

st o r e ?
Ho w m u ch st o ck is it n e ce ssa ry t o ca rry in w a r e
h ou se ?
How far is it e xp ed i e nt to go in th e m a n u fa ct u rin g
line in b ak ery co ff e e r oa stin g e t c ?
, ,
.

I s it a d vis abl e t o h a v e p riva t e l a b els o r u s e m anu

’
fa ctur ers l a b e ls ?
Wh a t p er c e nt o f p r o fit Sh ou l d th e w ar eh ou s e h a v e
from e ach s t or e ?
P e r ce nt age o f gr o ss p r o fit o f Br a n ch st o r e s ?
P er ce nt age o f e xp ens e o f B r a n ch st r so e ?

Wh a t is th e a v er age w ee kly v o lu m e o f b u sin ess o f

ch a in st o r e s ?
 R E TAI L TRA D E 1

How m any em p l o y ees t o each st o r e ?

Sa l ary p a i d t o m a n ager ?
I f b o n u s is p a i d is i t p a i d o u t o f the n e t p r o fits o r
,

t f r o ss r e ce i ts v r iv n a m u nt ?
o u o g p o e a g e o

Av erage r e nt o f st o r e s ?
Is it a d vis abl e t o ca rry m ea ts ? Fr esh fru its a n d
v ege t abl e s ?
Ho w m any st o r e s sh ou l d a n ins p ec t o r h av e s u p e r
visi o n o f?
Wh a t s al ary sh ou l d b e p a i d hi m ?

H ow o ft e n sh o u l d inv e nt o ry b e t ak e n ?
Sh o u l d m e r ch a n di s e b e bill ed a t r e t a il s e l lin g p ri ce
o r a t w a r eh o u s e p ri ce ?

Sh o u l d a n y b u lk go o d s b e s e nt to c h a in st o r e s o r
sh ou l d e v erythi n g b e pu t u p in p a ck age s b e fo re d e li v e ry
to st o r e s ?
Ho w m u ch sh o u l d b e s p e nt in a d v ertisin g a n d wh a t
,

pe r c e t sh o u l
n d e ac h st r b r
o e ea ?

Wh at m e th o d is ge n er ally u s ed n ewsp ap e r cir

—
,

cu lars o r o th e r m e th o d s ?
,

Ho w m u ch is a ll o we d fo r fixt ur e s a n d e q u i p m ent
o f ea c h st o r e ?

Wh at m eth o d is u s ed for co ll ectin g th e m o n ey fr o m

st or es ?
Has it p ro v e n p r o fit a bl e to k eep st o r es o p e n e v e n
in gs ?
H a v e ch e ck p rintin g C a sh R egist ers b e e n u s e d ?
-

I s it n e cess ary o r exp ed i ent to giv e st am p s o r

p r em i u m s ?

37 . K E AR SAR G E C O M P A N Y —
C HAI N ST O R E S
Go l den C o m p a ny , a fir m o f inv est m e nt b a nk er s ,
wer e re q u est e d in 1 9 1 9 t o p u r ch as e sh ar e s o f p r e
fe rr e d s to ck t o b e iss u e d by th e K ea rs a r ge C o m p a ny ,
o p e r a tin g a ch a in o f tw e nty fiv e a n d fifty cent s to r es T h e
-
.
62 MARK E TIN G PR OBL E M S
K e ars arge C o m p a ny h a d a ca p it a liz a ti o n o f
c omm o n st o c k a n d p re f e rr e d st o ck T h e n ew
.

issu e o f st o ck p ro p o s ed was 7 % cu m u l a tiv e ,

p a rti c i p a tin g p r e f e rr e d st o c
.k Pr a c ti ca lly a ll th e
h o l d ers o f t he p r e vi o u s iss u e o f p re fe rr ed st o ck h ad
a gr eed t o c o nv e rt th e ir Sh a re s int o th e n e w iss u e T he
.

n e w iss u e o f p r e fe rr e d st o ck w as t o b e r e d ee m abl e as

a wh o l e o r in p a rt a t 1 1 0 o n thirty d ays n o ti ce
’
.

T h e K e a rs ar ge C o m p a ny h ad n o b o n d ed d ebt a n d ,

it was a gr eed th a t n o m o rt gage m i ght b e p l aced o n th e

p r o p erty with o u t th e co ns e nt o f thr ee f ou rths o f th e
-

o u tst a n d in g p a rti c i p a tin g p r e fe rr ed st o ck e x cep t th a t

,

th er e m i ght b e a p u r ch as e m o n e y m o rt gage o n p ro p erty

acq u ir e d . I t w as fu rth er p r o vi d ed th a t th e cu m u l ativ e ,

p a rti c i p a tin g p r e f e rr e d st o ck S h ou l d r e c e iv e u p t o a n

a dd iti o n a l 1 % d ivi d e n d wh e n e v er n e t e a rni n gs f or o n e

ye ar a v a ila ble fo r d ivid e n d s o n th e co m m o n st o ck
e x ce e d ed The r e w as to b e a sinkin g fu n d ,

b eginnin g in 1 9 2 1 O f 3 % p er a nnu m o f th e o u tst a n d in g

,

pa rti ci p a tin g p re fe rre d st o ck . I t w as st at e d th a t th e

a nn u a l n e t p ro fits o f t h e c o m p a ny h a d a v e r a ged f o r
t h e p ast fiv e y ea rs a b ou t fift ee n ti m e s th e d ivi d e n d s
o n th e th e n o u tst a n d in g p r ef e rr e d st o ck a n d w e r e e q u a l

t o a l m o st 3 fi/ z ti m e s t h e 7 % d ivi d e n d s o n th e p arti ci

p a tin g p r e f e rr e d st o c k t o b e iss u ed .

T h e s a l e s o f t h e K ears a r ge C o m pa ny h a d b ee n
a p p r o x i m a t ely a s f o ll o ws : 1 9 14 ,
1 9 15 ,

19 16, 1 9 17, 1 9 18,

T h e b a l a n ce sh ee t w as s atisfa ct o ry T he .

r ece ip ts fr o m th e s a l e o f this n e w st o ck w er e t o b e
u s e d f o r r e d u cin g c u rr e nt li a biliti e s an d p r o vi d in g f u n d s

fo r th e e x p a nsi o n o f th e b u sin ess .

I t was st a t e d in th e l e tt er t o th e b an k e rs th at th e
K e a rs a rge C o m p a ny o p er a t e d a c h a in o f s o ca ll e d -

d ep art m e nt st o r e s l o c a t ed in i m p o rt a nt c iti e s thr ou gh

ou t th e E a st e rn h a lf o f t h e Uni t e d St a t e s T h e st o r e s
.

s o l d m er ch an d is e r a n gin g in p ri ce fr o m o n e c ent t o
fif ty ce nts , b u t it wa s e sti m a t ed th a t 9 0% o f th e b u si
n ess wa s d o n e in tw e nty fiv e a n d fifty c e nt go o d s
-
.

T h e first st o r e o f this c o m p a ny w a s e st ablish ed in a

m a nu fa ct u rin g c ity in N ew E n gl an d in 1907 .
 R E TAI L TRA DE 63

T h e K e ars ar ge C o m p a ny h as a p r o fit sh arin g p l an
with th e m a n agers o f th e st o r e s I t w as st a t e d , f u rth er
.

m or e , th a t in e a ch st o r e th e c o m p a ny h a d t w o t o fiv e
you n g m en in p r a cti ca l tr a inin g a s m an a ge rs o f f u t u r e
st o r es whi ch th e c om p a ny p l a nn e d t o O p e n T he .

bra n ch e s o f this co m p a ny w er e l o ca t e d in d i ff er e nt
c iti e s , th u s t e n d in g t o p r e v ent b u sin e ss fr o m b e in g

a d v e rs e ly a ff e ct e d t o a n y gr e a t e xt e nt by fir e s , strik e s ,

o r o th e r l o ca l c o n d iti o ns th a t d o n o t a ff e ct t h e c o u ntry

as a wh o l e T h e co m p a ny s o l d o nly for ca sh a n d d id
.

n o t o p e r a t e a d e liv ery syst em .

Wh a t a dd iti o n a l inf o rm ati o n o n th e m a n age m e nt

o f th es e st o r e s w ou l d b e u s e f u l t o t h e inv est m e nt

b a nk ers in d e ci d in g wh eth er o r n o t t o p u r ch as e th e s e
s ecu riti es for s ale to th eir cu st o m ers ?

38 . N AT I O N A L H AR DW A R E ST O R E S ,
INC .

T he fo ll o wing st a t em ent d es crib es th e p l a n of

o r ga niz a ti o n o f a c h a in o f r e t a il h a r d w a r e st o r e s 1 .

T he N ati o n al H ard wa r e Sto r e s I n c ha s b e e n i n co r

,
.
,

po r a t ed u n d e r t h e l aws o f t h e St a t e o f N e w Y o r k wit h t h e ,

u s u a l n o m i n a l c a pit a liz a ti o n a t t h e s t a r t o f s i m il a r l a r ge

e n t e r p r i s e s s h o rtly t o b e i n cr e a s e d t o
, o f p r e fe r r e d

s t o ck a n d s h are s o f c o m m o n .

T he cor p o rati o n i s fo r m e d u n d e r t he r e ce n t N O P a r
”
St o ck a ct wh i ch i s i n te n d e d t o pre ve n t o ve r ca pit a liz a ti o n -
,

a n d i s t h e fir s t h ar d war e e n t er p ri s e t o t a k e f o r m u n d e r

t hat a ct .

T h e n ew c o r por a ti o n p r o po s e s t o o pe r at e a c ha in o f r et ail
h ar dware s t or e s A s a n u cl e u s it i s co n s oli d ati n g a gr o u p
.

O f e st a b li sh e d s t or e s l o c a t e d i n s el ect e d t o w n s i n t h e E as t e r n

1 T his st a t e m e n t is r e ri t d fr o m t h e H rd w r D l M g ’
p n e a a e ca c r s a a z i ne ,

u n e 1 9 1 7 pp 1 35 1 38 by pe r miss io n o f t he N t o al Ha r d war e
gt ores 1 c
-
, , .
, a i n

,
n .
64 MARK E TIN G PR OBL E M S
s t ates , an d , l at er o n , e x pect s b oth to a cq u ir e a dd iti onal e st ab
lis hed st o r e s a n d t o o pen n e w o n es thr o u gho u t t he co un try .

T he p l ans o f t h e o r ga n iz er s a r e v ery com plet e an d c o m

p reh en s ive , a n d a r e d evi s ed t o p rovi d e , f r o m t he c e ntr a l
o ffi ce , s ci e nti fic m e r cha n d i s i n g, m o d ern s al es p r om o ti o n a n d
d et a il ed a cc o u n ti n g f o r t h e st o r e s co m pri s i n g t h e ch ain .

The s e p l an s Will i n t ere s t t he hardwar e tr ad e , an d ar e h ere

b ri efl y d e s crib ed .

T h e o rganiz er s b eli eve ther e a r e l arge profit s t o b e m a d e

in t h e m er ch an d i s i n g o f h ar d ware , b y c l o s ely wat chi n g t he
am o u n t o f c a pit al inv e st e d in v a ri o u s st o cks .

T h e p l an co n t e m p l at e s t h e o per ati o n at t he c entra l

o ffi ce o f a pe r p e t u a l inv e n t o ry f o r e a ch s to r e , s e cu r e d b y
m ea n s o f mercha nd i s e co d e n u m b ers a n d o p er at ed by a n
el ectri cal m a ch i n e c all e d t h e H o ll erith Tab u l ati n g M a chine .

T he m er cha n d i s e co d e i s s i m ply a sto ck n um b er u s e d in

pl ace o f t h e m an u fact u rer s n u m b er, e x ce pt tha t it goe s
’

f u rth er a n d c over s t h e n am e o f t he arti cl e , d e s cri p ti o n ,

q u a lity a n d s iz e It co m pl etely d e s cribes t he arti cle With
.

o u t t h e u s e o f wo r ds , a n d i s m arke d o n t h e pri c e t ags , b o x es

-

an d s a m pl e s .

T he u s e o f these d e s cri ptiv e n um b er s p ermits sto ck

record s to b e m ad e u p at t h e ce n tral o ffi ce s o n t h e t ab u lat in g
m achine very ra p i d ly a n d at lo w co s t Thi s m achine w as
.

o ri gi n ally d e s i gn ed f or u se in t h e C e n s u s d e pa rt m e nt a t

Was hin gto n It h as since co m e t o b e u s ed in th e b ig r ail

.

ro ad s , life i n s u ra nce com pani e s an d gre at m anuf a ct ur in g

p l a n ts o f t h e c o u ntry O n e o f t h e l ar ge r e tail m er ca ntil e
.

b u s ine ss es o f N e w Y ork h a s f o r t h e p a s t fiv e ye ars k e pt it s

s t o ck r e cor ds b y a num eri c co d e s ys t em whi ch was d evi s ed
by o n e o f t h e o r gani z ers o f th e N ati o n al H ardware St or es , I n c .

T h e H o ll erith Tab u l ating Sys t em , as t hi s el e ctri cal m a

chinery is c a ll e d , c o ns ists o f thr ee p arts : a k ey p u n ch , a
s o rt er an d a t ab u l at o r .

T h e d et ail O f a tr an s a cti o n , s u ch a s a s al e o f m er cha n

d i s e, is pun che d o n a s pe ci ally d e s i gn e d car d , whi ch shows
t h e s a l e s m a n s n u m b er , t h e c o d e n u m b e r o f t h e go o d s , t h e
’

q u an tity a n d t h e s elli n g p ri ce , t h e d at a b e i n g t ak e n fr o m
t h e s al e s ti ck et m ad e b y t h e cl erk , w h o s ells t h e go o ds a n d
c o pi e s o ff t h e m ar k i n g o n t h e go o d s o r b ox T h e p u n chi n g
.

is d o n e in t h e central o ffi ce, a n d i s very ra pi d , o perato rs

fr equ e ntly d o ing f o ur h u n d r e d card s an h o u r .

The s e card s th u s p u n ch ed ar e s ort ed el ectri cally by

s al es m e n s n u m b er s a n d t h e am o u nt o f s al e s fo r e a ch c l erk
’

t hen t ablu at ed They ar e th en r e—sort ed b y m er chandi s e

.

co d e s a n d fil e d by st or e s a n d s t o ck n u m b er s in o p e n file
b o x e s wh er e th ey ar e q u i ckly a va il ab l e f o r m a ki n g u p sto ck
r ecor d s sh owing s a les a n d s t o ck o n ha n d in e a ch s t ore .

T h e s orti n g m achi n e s ort s t h e p u n che d card s at t he rat e

 R E TAI L TRA D E 65

o f on e h u ndr ed a n d s even ty fiv e p er m i n u t e a n d t h e a dd i n g
-
,

o f t h e a m o u nt s o n t h e c ar d s b y t h e t ab u l a t o r i s d o n e a t t h e
rat e o f o n e h u n dr ed a n d twen ty fiv e p er m i n u t e -
.

T h e gr e at s p e e d a t w hi ch thi s w o rk i s d o n e m ak e s t h e
co s t o f p r o d u ci n g t h e r e c or d s o f s a le s a n d s t o ck o n h a n d
very s m all a n d t he r ecord s ar e availab l e withi n twe n ty f o u r
,
-

ho u r s a ft er t he s al e .

T h e u s e o f a m er cha n d i s e co d e al s o p er m it s o f t he s t a n d
a r d iz a t io n O f m er ch a n d i s e in m a n y s t o r e s A c ar e f u l s t u d y .

will b e m a d e o f a ll ki n d s o f a rti cl e s capab l e o f s al e in a

“ ”
pro perly r u n h ar dwa r e s t o r e a n d t he b u y er wil l th e n pi ck,

t h e it e m that i s b e s t f o r t h e c u s t o m er an d m o s t pro fit ab l e
f or t h e s t or e .

T h e m er ch and i s e s o s el ect ed will b e o ffer ed t o t h e p u b li c

u n d e r a n o v el d evi ce d e s cri b e d as a S u p er Tr a d e M ark - -

“ ”
T h e Pi ck o f t h e M ar k et t h e d e s i gn o f whi ch h as b een fil ed
,

in t h e Unit ed St at es pat ent o ffi ce a n d a ppli cati o n m a d e f or

it s regi s try .

It i s t he p oli cy o f t he co m pany t o d e al in s t an d ar d b rand

goo d s in pre fer enc e t o priva t e b r a n d s o f it s o w n m er ely ,

a ffi x ing it s S u p er Tr a d e M ar k -
th u s i n d or s i n g t h e arti cl e
-

“
as T h e Pi ck o f t h e M ar k et It i s t he int enti o n o f t he
.

m an agers o f thi s b u s i n e s s t o m ak e t h e
Su p er Tr ad e M ark a m ark o f s ervi ce
- -
,

rather than a br and o f m er ch an d i s e ,

whi ch sym b oliz e s t h e s ervi ce n ot o nly

t o t h e c o n s u m er b u t al s o t o t h e m anu
f a ct ur er .

T h e st and ard iz atio n o f m er ch an

d i s e u nd er this S u p er Trad e M a r k - -

(whi ch a l s o carri e s t h e m er ch an d i s e
c o d e a n d s e lli n g pri ce ) m ak e s it p os ,

s ib l e fo r t h e ce n tral o ffi ce t o give e ff e c

tive co —o peratio n a n d a ss i st a n ce t o t he
m ana ge r s o f t h e s t o r e s in s el ecti n g t he
b es t m er ch and i s e b o u gh t at t h e l o w e s t
p ri ce a n d a l s o t o m ai n t ai n pr o perly b al a n ce d s t o ck s witho u t
,

loa ding d et ail work o n t he m en in t he s t o re s T h e s t o re .

m an a ger s will o f co u r s e b u y s u ch go o d s a s a r e p e cu li a r t o
, ,

their l o ca l requ ire m ent s .

T h e c l erk s a n d m a na ger s will b e fr ee t o co n centrat e o n

t he a ll i m port a nt work o f s el li n g go o d s
-
.

Pro visi o n i s al s o m ad e in t h e p l an s o f t he n e w b u s i n e ss
for a si m pl e yet co m pl et e a cco u nti n g s y s t e m w h i ch wil l b e ,

pr o d u ce d a t t h e c entra l o ffi ce fo r e ac h st or e a s a d i s ti n ct an d
s e pa r at e u n it Th er e will th u s b e a va ilab l e f o r e a ch s t o re
.

m anage r e a ch m o nt h a n o per ative st at e m ent a n d b a la n ce

,

she et showing t he tr ans a cti o n s f o r t he m o n th a n d al s o fo r ,

t he ye ar t o d at e T hi s m o n thly r ep ort will b e m ad e u p at

’

t he ce ntr al o ffi ce witho u t i m po s ing o n t he st or e s a n yt hing

66 MARK E TIN G PR OBLE M S
o ther than t h e m aking o f s al es ti cket s e t c for each , .
,

trans acti on ; n o Spe ci al r e ports b eing r eq u ired .

This st or e r e port will show t h e s al es o f e a ch s ale s m an .

A b on u s sys t em will b e o perat e d a n d e a ch clerk will r eceive

an a d eq u at e a n d li b er a l c o m p ens ati o n in pro port i o n to hi s

a b ility a n d e ffi ci en cy .

T h e a im o f t h e m anagem ent i s t o have a ll work d o n e in

t h e ce ntra l o ffi ce that ca n poss ib ly b e d o ne th er e s o tha t ,

t h e s t or e m e n m ay s ell go o d s a n d t o a ss i s t th em in t he work
,

m od ern sa le s pr o m o ti o n he l p s will b e pr ovi d e d .

M o dern s a le s pro m oti o n m ean s fir s t aro u sing th e i n t er

, ,

e s t O f a l ar ge n u m b e r o f p o ss i b l e c u s t o m ers by d ir e ct a d v er
t is in g t o th eir h o m es ; s eco nd s u ppl em enting this i n t er e s t by
,

a d ve rti s ing in news p a p ers a n d ot h e r l o ca l m e d i u m s ; thir d ,

a ttr acting t h e cu s t o m e r th u s int er e s t e d int o t h e st or e by

e ff e ctive wi n d ow d is pl ay o f t h e goo d s a d v erti s e d ; a n d f ou rth

,

ins tr u cting t he st o re s ales m en what t o say an d h ow t o s ay

it whe n t h e cu st om er is in th e st or e an d fina lly an d m o s t
, ,

i m porta nt p aying t h e s alesm an a s p eci al com pens ati o n or

b o nu s f or s peci al effi ci e n cy s u cce s s an d eff ort
, .

A s ales pro m o ti o n d e p artm ent will b e organi z ed at the

ce n tr al o ffice whi ch will f u rni sh a r e gu l ar s ervi ce o f d ir e c t

a d verti s in g t o s el e ct e d list s o f cu st o m ers m a d e u p by t h e

st or es al s o n ews pap er an d str eet c ar a d vertisin g go tt en u p
, ,

by e x pert s Sho w W indows d es igne d in st and ard f orm by

, ,

s peci ali s t s f or e as y ar rangem ent in st or e win d ows an d m os t

, ,

i m port ant o f all a syst em o f traini n g s al e s m en whi ch will

, ,

a s sist th em t o s ell int elli ge ntly t h e go o d s carri e d b y t h e

st ore s.

T h e b asis o f tr ai ni ng s al es m e n is t o s e cu r e fr o m t h e
m an u f act u r er with who m a n o r d er is pl a ce d a f u ll st at em en t
o f t h e s e lli n g p o ints o f t h e goo d s b o u ght whi ch is p as s ed
,
“ ”
o n as s ellin g t alk t o t he st ore cl erks at t h e tim e t he goo ds
,

ar e p u t o n s al e .

It is b eli eved by the organiz ers that t h e s al es pr om otio n

wo rk o f t his o rgani z atio n wi ll a p pe al e s peci ally t o t h e m anu
f a ct u r er wh o is i n t er est e d in p l a ci n g his pr o d u ct in t h e h an d s
o f t h e con s u m er a n d th a t t h e p l ans o f t h e N a ti o n a l H ar d
,

ware St ores m a d e t o this en d will r e ceive ready cooperation

f ro m t h e m an u f act u r ers .

E m pha s is is l ai d by t h e m an age m ent o f t h e com p any on

t h e fa ct th at n o pri ce cu tting po li cy will b e co u nt enan ced .

Very com pl et e d et ail e d prepar ati on ha s b een m ad e f o r

givin g eff ect t o t h e a d m in i s tr ati o n o f t h e b u s in e ss in h ar m o ny
with the s e p oli ci e s t h e work having b een in cours e o f
,

d eve l o pm ent f or t h e pas t t wo years .

D u ring thi s ti m e thor o u gh s t u dy h as b een m ad e o f m any

t owns an d citi es Within a twelve ho u r r ad i u s o f N ew York
 R E TAI L TRA D E 67

C ity , co verin g n ot o n l y t he l o cal co n d iti o n s o f t he to wn a n d

b ack co u ntry, b u t e s peci ally tha t o f t h e h ar dwar e tr ad e th er e .

Town r eports in st an d a r diz e d f or m h ave b e en s e cu r ed

o n o v e r o n e h u n dr e d t o wn s , c ov erin g t h e e s s enti al f a ct s
u n d er t h e f o ll owi n g h ea d s , viz
w P o pu lati o n a n d aven u es o f trans port ati o n .

w R at e s an d d i s t ance s o f t r a n s port ati on a n d comm u t ati o n .

p M u ni ci pal i m pro v em e nt s .

p C i v i c d ev el o pm en t .

m R et ail co nd iti o ns .

m I n d u stri al co n diti o n s .

fl B a ck co u n try .

m H ar dwar e co n diti ons .

c E s p eci al f eat u re s a n d ph ot ograph s .

Fro m a st u d y O f th e s e t own r e p ort s a s el e cti o n o f tho s e

be s t s u it e d for b u s i n e ss d evel o pm e n t i s m ad e, an d negoti ati o n s
o p e n e d f or a h ar d war e s t or e t h er e .

T h e p ur p o s e o f thi s v ery e x h a u stive inv e s ti gati o n i s

T o a s s u r e t o t h e o rga n iz atio n at t hi s ti m e a gr o u p o f s u c
c ess f u l e s t ab li s h ed h ar d war e s t or e s , t h e o wn ers o f whi ch
r ealiz e t h e p o ssi biliti es o f hard ware ch ain st ore s , d es ire t o
p arti ci pat e in t h e l arge p r o fit s t o b e m ad e a n d ar e willi n g t o
coo p era t e wi th e a ch o t h er a n d t h e O ffi cer s O f t h e c o m p an y
t o t his en d .A s u ffi ci en t n u m b er o f h ar dwar e d e al er s h av e
a gr e e d t o j o in t h e c o m pan y t o a s s u r e it s s u cce ss It i s t he
.

p o li cy o f t h e c o r p o r a ti o n t o b u y m e n i n t o it s o r ga n iz ati o n
”
rather than t o b u y o ut t heir b u s i n ess e s .

T h e b o ar d o f d ir ect ors will con t ai n a n u m b er o f n am e s

well kn own t o t h e tr a d e .

T h e o r ga n iz er s o f t h e N ati o n al H ardwar e St or e s , I n c , .

a r e W A M cFa d d e n a n d J o h n M G ai n e s
. . . T h e f o r m e r w as
.

f or fiv e ye ars with a l a r ge We s t e r n j ob b i n g ho u s e , a n d f o r
t h e p a s t e i ght ye a r s h as b e e n e n ga ge d in o r ga n izi n g a n d m er
c h a n d is in g e ffi ci e n cy wo r k i n N e w Y o rk C ity f o r a n u m b e r

o f l ar ge b u s i n e ss h o u s e s .

Mr G ai n es wa s f o r m an y year s an o ffi cer a n d d ir e ct o r

.

o f t h e R em i n gt o n Ar m s U M C C o , a n d i s we ll kn own t o
—
. . . .

t h e h ar dwar e tr a d e .

Th ere will b e ass o ci at e d wit h th e or gan iz er s in t h e a d m i n

is tr at io n o f t h e c o r po r a ti o n , as o ffi ce r s , d i r ect or s a n d m a n
a ger s , a n u m b e r o f m e n s e le ct e d wit h s p eci a l r e f e r e n c e t o
t heir a b ility t o co n trib u t e t o t he p r a cti cal m a n agem e n t o f
t h e h ard w a re b u s ine ss , a n d t he fi n an ci a l st a n d i n g o f t h e
co rpo ra ti o n .

D is cu ss this p l a n fr o m th e st a n d p o in t o f M r Willi a m .

R ee d th e p r o p ri e t o r o f a r e t a il h a r d war e st o r e in a
,

t o wn o f p o p u l a ti o n in ea st e rn N e w Y o rk .

I f h e S O d esir e s M r R eed m ay h a v e a n o pp o rt u nity t o

,
.
68 MARK E TIN G PRO BLE M S
j o in this o rga niz a ti o n T h e a nn u al s al es in his st o re a r e
.

a b ou t a y ea r ; his to t a l e x p ens e is of

n e t s a l e s a n d his a nn u a l ra t e o f st o ck t ur n
,
-
ti m e s .

T h e st o r e h as b ee n in o p e r a ti o n f o r a p e ri o d o f y e a rs
a n d h as a r ep u t abl e st a n d in g in th e co mm u nity .

39 . C H I CA G O G R E A T W E ST E R N R AI L RO D
A —
R E TAI L
ST O R E S
f o ll o win g n ewspap er d isp at ch fr o m K a ns as
T he
C ity M is s ou ri , w as pu blish ed M a r ch l st, 1 9 15
'

T h e C hi cago G r ea t We s t ern R ailro a d is go ing to o pe n

gen era l st o r es in a ll its s m a ll s t a ti on s , if a n e x perim en t t o
b e tri e d o u t at th e s e st ati o n s in Mi ss o u r i is s u cce ss f u l .

A f u ll st o ck o f m er chandi s e h as b een o rd er ed f o r store s

at Wo o d r uff , West Pl atte a n d N ew M ar k et , M o , in t h e .

Bee C r eek Va lley .I f t h e p l an p r oves a s u ccess , it will b e

f o llowe d a t o ther t owns .

T h e o b j e ct is t o incr eas e t h e b u s iness of t h e r ailr o ad in

town s wh er e a t pre s ent ther e i s p erhaps o nl y o n e genera l
s tor e, o r non e a t all, a n d t o pro vi d e b ett er o ccu p ati o n f o r
t h e st ati o n a gent s , wh o n o w h ave littl e t o d o It will a l s o
.

in cr eas e their incom e, an d m ak e their s ervi ces o f m or e valu e

t o t h e ro a d .

A f u ll st o ck o f m er chan d i s e , s u ch as is han d l ed by t h e
u s u al ge n er a l s t o r e in s m a ll t own s , will b e ke p t , a n d wi th
th e b a ck i n g o f t h e r a ilr o ad t h e st o r e s will o ff er a lively
co m p etiti o n f or t h e b ig m a il or d er h o u s es
-
.

T h e s ys t em o f u s i n g r a ilro ad st ati o ns f or gen eral sto r es

ha s b ee n d e m o ns tr at ed a s u ccess b y t h e K ans as C ity-St .

J o s ep h Int er u rb a n Line , whi ch h as b een o peratin g s t o re s a t

s everal st atio n s O n ly t h o s e t own s wh i ch have li m it ed
.

s t or e f a ciliti es will b e i n cl u d ed T h e n ew p la n wi ll b e
.

inau gu rat e d a s s oo n as t h e s t o cks can b e i ns t all ed .

Wh a t ar e th e chi e f ap par ent O bst a cle s to th e

su ccessfu l o p era ti o n o f s u ch a p la n ? I n h ow far can
th e o bst acl e s p r o b a bly b e o v er co m e ?
 R E TAI L TRA D E 69

40 . FE R R Y SO A P C O M P AN Y —
C HA I N ST O R E O UT LE T
T h e Fe rr y Soap C o m p any , m a n uf ac t u r in g t o il e t
s oap s o l d u n d er th e Fe rry bra n d , is p l ann in g f or a n
T h e co m p a ny s p r o d u c t h e r e
’
e x p a nsi o n o f its s a l e s .

t o fo re h as b ee n s o l d c hi efly t h r o u gh u nit st o r es T h e .

co m p a ny is c o nsi d e r in g t h e o pp o rt u nity o f s e llin g t o

cha in st o r e s O n e o f th e q u e sti o ns fo r d ec isi o n is

.

wh e the r to s o li cit b u sin ess fr o m c h a ins o f fiv e a n d ten

ce nt st o r e s o r c h a ins o f d r u g st o r e s , o r b o th .

I n h ow far will this c o m p a ny fin d th a t th e s am e

fa ct o rs ar e inv o lv e d in s ellin g t o ch a ins o f fiv e a n d
ten ce nt st o r e s as in s elli n g t o ch a ins o f d ru g st o r es ?

41 . P O T O MA C M I LL S -
FI V E AN D TE N C E N T ST O R E
C O N T R ACT
T h e P o t om a c M ill s , l oca t e d in P e nnsylva nia , h a v e
ha d a nn u a l s a l e s r a n ging fr o m to
T w o thir d s o f t h e s a l e s o f th e co m p a ny h a v e b e e n
-

m e r ce riz e d cr o ch e t co tt o n a n d th e r em a in d e r fa n cy
d a rni n g c o tt o ns o f f ou r di ff er e nt typ e s T h e c o m p a ny
.

h as di strib u t e d its e nt ir e p r o d u ct thr o u gh t h e r egu l ar

tra d e , s ellin g to o n e wh o l e sa l er in B o st o n , o n e in N e w
Y o rk , a n d o n e in C hi ca go T h e co m p a ny h as b e e n
.

a bl e t o co u nt in n o r m a l y ear s o n a n e t p ro fit o f 2 %

o n a ll its p r o d u cts .

T h e P o t o m ac M ills h a v e r ece iv e d fr o m a ch a in
st o re co m p a ny a n o ff e r to b u y o n a o n e- yea r co ntr act ,
s u bj e ct to r e n e wa l , w o rth o f m er ce ri z e d
r
c oc he t tt o n a t a p ri ce whi ch r ep re s ents a n e t p r o fit
co

of with t h e p r es ent b a sis o f co sts u n ch a n ge d .

T h e r e t a il co m p a ny o p e ra t e s a c h a in o f fiv e a n d t en
ce nt st o r e s l o ca t e d in m a ny o f t h e c iti e s an d t o wns in
70 M ARK E TIN G PR O BL E M S

the Unit ed St at es h a vin g a po p u l a tio n o f o ve r

,

an d s o m e st o r es in s m a ll e r t o wns .

Wh a t m u st th e P o t o m ac M ills t ak e int o co n si d era

ti o n in r eachin g a d ecisio n o n this o ff e r ?

42 . SW E E T S C O M P A N Y O F A M E R I CA , I NC .
—
SA LE S
C O N T R A CT S
fo ll o wing n e ws d isp at ch w as p u b lish e d in th e
T he
Bo st o n Tr a ns crip t N o v em b e r 1 s t 1 9 1 9 :
, ,

Fo u r co ntr a cts with l ar ge com pani es for t h e d i s trib u ti o n

o f t h e pr o d u cts o f t h e Sweets C o m pan y o f A m eri ca , I n c , .

have j u s t b e en signed by Sam u e l F Willi am s , pre s id ent o f

.

that cor poration They ar e with t h e Atl anti c

. P acifi c
T ea C om pany , with stores thr ou ghou t t h e cou ntry,
t he Am eri can St or es C o m p any , wi th a ch ain o f stor e s ,
with L o uis K Li ggett , f o r d i strib u tio n of t h e pro du ct thr o u gh
.

t h e Li ggett s t or es , a n d with Wa rd G o w , f o r d i strib u ti o n

o f t h e Sweet s C om p any s pr od u ct in t h e e l evat e d a n d s u b
’

w ay s t ati o ns in N ew Y o rk Th es e c o n tr act s , a ccor ding to

.

Mr Willi am s , wi ll as s u re imm ed i ate d i s tribu tio n f or every

.

p ou nd o f its pro d u ct t h e Sweets C o m pany is ab l e t o t u rn ou t .

D is cu ss th e li cy fr om the st an dpo int o f th e

l
s a es po
m an u fa ct u rin g c om p any .
 R E TAI L TRA D E 71

43 . U N I TE D D R U G C O M P A N Y P LAN
T h e Unit ed D ru g C o m p a ny was in corp or a t e d in
1 902, f o r th e m a n u f a ct u r e a n d s a l e o f p r o d u cts s o l d
in r e t ail d ru g st o r es T h e p l a n o n whi ch th e co m pa ny
.

wa s o rga ni z e d p r o vi d e d f o r t h e o wn e rshi p o f th e co m
m o n st o ck by r e t a il m e r ch a nts E a ch r et a il e r wh o was
.

a s to ckh o l d e r th e re by b eca m e a n e x c l u siv e a ge nt in

his d istri ct f or th e R ex all go o d s m an u fact u r ed by th e

Uni t ed D ru g C o m p a ny T h e goo d s m a d e by th e
.

co m p a ny we r e to b e s o l d u n d e r t h e R e x a ll tr a d e- m a rk .

A pp ar e ntly o n e o f th e O bj ects o f th e o rga niz ati o n

“ ”
O f this co m p a ny was t o m ee t th e p ri ce c u ttin g e vil
-

in th e d ru g tr a d e a s w ell as t o p r o v i d e a n o u tl e t fo r
th e p r o d u cts o f th e n ew m a n u f a ct u rin g co m p a ny For .

a p e ri o d O f fift ee n y e a rs p ri o r t o t h e o r ga ni z a ti o n o f th e
Uni t e d D r u g C o m p a ny , p ri ce cu ttin g, e s p ec i ally o n
p r op ri e t a ry a rti cl e s , h ad b ee n p r e v a l e nt in th e r e t a il
d ru g tr a de .

A cco r d in g to th e p u blish e d fin a n ci a l r ep o rt s o f th e
c o m p a ny , its a u th o ri z ed ca p it a li z a ti o n in 1 9 1 9 was as

fo ll o ws :
7 % cum u l a t iv e first p r e f err e d st o ck .

6 % n o n cu m u l a tiv e s e co n d p r e f e rr e d
-

st o ck .

n st o ck
co mm o .

O f this a u th o riz ed cap it a liz a ti o n w as

o u tst a n d in g in 1 9 1 9 .

I t was st a t e d th a t in 1 9 1 9 th e co m pa ny contr o ll ed
th e f o ll o win g s u bsi di ari e s : th e L o u is K Li gge tt C o m .

p a ny o p e ra tin g a ch a in o f 18 6 r e t a il d r u g st o r e s in t h e
,

Unit e d St a t e s ; th e Uni t e d D ru g C o m p a ny Lim it ed , ,

o f C a n a da ; Unit e d D r u g C o m p a ny o f G r ea t B rit a in ;

C o op e r a tiv e R ea lty C o m p a ny ; Sea m l ess R u bb e r C o m

’
p a ny Sch u hl e s P u r e G r a p e J u i ce C o m p a ny ; N a ti o n a l
C i gar St a n d s C o m p any ; G u th C h o co l a t e C o m p a ny .

T h e m e r ch a n di s e s a l e s f or t h e y ea r e n d in g J u n e
30 ,
1 9 03 ,
wer e 1 907 ,
19 18 ,

In 1 9 19, bou t a r e t a il d ru ggists w ere re p o rt ed

to b e st o ckh o l d e rs an d e x cl us iv e age n ts for th e
R ex a ll p r o d u cts .
72 MARK E TIN G PR O BLE M S
T h e Unit e d D r u g C o m p a ny m a n u fa ct u r e s p r o
p r ietary m e d i cin e s , p e rfu m e s , p h ar m a ceu ti ca ls , t o il e t
a rti c l e s , r u bb e r go o d s , a n d n u m e r o u s o th e r a rti cl e s

s o l d in r et ail d r u g st o re s .

So o n a ft e r its o rga niz a ti o n t h e Unit e d D ru g C o m

p an y b ega n t o o p e n r e t a il st o r e s t o b e o p e r a t ed a s
r e t a il bra n ch e s a n d kn o wn a s th e Li ggett st o r e s .

Th es e st o re s we re l o ca t e d in th e l arge r c iti e s P r e .

sum a b ly o n e o f t h e o bj e cts in o p e nin g th e s e st o r e s w as

t o e n a bl e th e c o m p a ny t o m ee t th e co m p e titi o n o f
o th e r ch a ins o f d r u g st o r e s I n 1 9 1 5 th e Unit ed D ru g
.

C o m p a ny a cq u ir e d co ntro l o f th e R ik e r- H egem a n c h a in
o p e r a tin g a b ou t nin e ty d ru g st o re s in t h e l a r ge c iti es

in th e E ast This ch ain was m e rge d with th e ch a in o f

.

r et a il bra n ch e s O p er a t e d by th e U ni t e d D ru g C o m p a ny .

D o e s th e p l a n o n whi ch th e U ni t e d D r u g C o m p an y
is o rganiz e d a n d o p e r at ed a pp ea r to b e app li cabl e t o
th e gro ce ry b u sin e ss ?

44 . SU DB UR Y C O M P A N Y— M AN U FA C T UR E R S RE TAI L
BR AN C H E S
T h e ge n era l m a n age r o f t h e Su d b u ry C om p any ,
m a n u fa ct u r ing an ar ti c l e n o w s o l d thr ou gh u nit st o r e s ,
is c o nsi d erin g th e a d vis abi lity o f es t a blishin g a ch ain
o f r e t a il br a n ch e s He d esir e s info rm a ti o n o n th e
.

fo ll o win g p oin ts l z
I n W h a t tr ad e s ar e m anu fact u r e rs r e ta il bra n ch
’

st o r es in O p e ra ti o n ?
Wh a t ar e t h e ge n e r a l ch ar act eristi cs o f th e m er
ch an dis e s o l d in th e s e st o r e s ?

Jo hn Alle n M ur ph y, L E Wat e r m a n C o m pan y s L a b o r a t o r y

1 “ ’ ‘ ’
. .

Re t ai l St o r es , ”
P ri n te r s I n k , Se p t e m b e r 7 , 1 9 1 6 , p p 3 8
’
.
-.
“
M e t h od s
an d P o c es O f t h e N e w E n gla n d S h oe M an uf ac t ur e rs ,
li i P ri n te rs
’

I n k , A pr il 2, 1 9 1 4 , pp 3 - 1 3, 1 3 6 - 1 3 8
. .
 R E TAI L TRA D E 73

Wh a t h av e b een th e o bj e cts o f m a n u fa ct u r ers in

e st ablish in g th es e r e t a il br a n ch es ?

H a v e th es e o bj ects ge n era lly b e e n a tt a in e d ?

45 . L E X I N G T O N SH O E C O M PAN Y M A N U FA C T U R E R S
—
’

R E T A I L B R AN C H E S
T he L e xin gt o n Sh o e C o m p a ny p r o d u ces w o m en s ’

sh o es o f go o d q u ality t o b e s o l d a t a m edi u m p ri ce .

T he c o m p a ny h as a l a r ge o u t p u t . Ab ou t o n e h a lf o f
-

th e sh o e s th a t it p r o d u ce s b e a r t h e m an u f act u r er s
’

br an d n am e whi ch is w ell a d v ertis ed T h e r em ain d e r

.

is s o l d u nbr a n d e d to wh o l es al ers a n d r e t a il e rs Fo r .

th e s a l e o f its br a n d e d p r o d u ct t h e c o m p a ny h e r e t o f o r e
h as gr a nt ed e x cl u siv e agen ci e s t o d ep art m e nt st o r es in
th e l ar ger c iti e s in th e Unit e d St a t es This co m p any
.

is c o nt em p l a tin g th e est ab lish m e nt o f a ch a in o f s ev er a l

h u n d r ed bra n ch e s thr ou gh whi ch e v e nt u a lly it is h op ed
to m ark e t its e ntir e o u t pu t .

Wh a t a r e th e o bst acl es t o b e o v er co m e in eff e ctin g

this ch an ge in p oli cy ?

46 . M E E TI N G M A I L O R D E R C O M P E T I T I O N
f o ll owin g st a t em ent is q u o t e d fr o m a car d
T he
s e nt o u t by Sm i th B r o wn
, C o m p any a m ail o r d e r
,

h ou s e in D ecem b e r 1 9 1 5 :
, ,
74 MARK E TI N G PR OBL E M S
S to p
Pa ying N e ed less Pr ofit s
K ee p Thi s M oney at H om e— Righ t in Yo ur O wn P o cket .

When yo u b u y f ar m i m pl em ents in t h e o r d in ary re t ail

wa y yo u u s u ally pay a pr ofit o f 2 0 t o 4 0 p er c en t o ve r t h e
p ri ce a t whi ch t h e go o d s a r e s o l d by t h e m a n u f a ct u r e r t o
t h e j ob b er o r d ea l er Thi s pr ofit is t h e o nl y pa rt o f t h e p u r
.

“
ch a s e p ri ce th a t r e ally s t ay s a t h o m e t h e b alan ce goe s
,

b a ck t o t h e m anu fact u r er wh o m ay b e lo cat ed a tho u san d

,

o r m o r e mi l e s away Wh en y o u b u y o u r i m p lem en t s ga s o
.
,

line e n gi n es cr ea m s eparat or s b u ggi e s O r o t her go o d s m a d e

, , ,

in o ur o wn f a ct o ri e s a n d s o l d dir ect fr om t h e f a cto ry t o yo u ,

y o u s ave m idd le m en s pro fit s fo r o nl y t h e m a nu f a ct u r er s

’ ’
,

p r o fit i s a d d e d t o t h e a c t u a l c o s t o f t h e g oo d s T h e m o ney .

“ ”
y o u s av e n ot o nl y s t ays at h om e b u t yo u can k eep it
right in yo u r O wn po ck et S u r ely t hi s is c lo s er t o t h e pri n
.

c i p le o f ke e ping m o ney a t h o m e th an an y o th er m eth o d o f

b u yi ng .

Alm o s t every ki nd of m achinery or s u ppli es that you

u s e o n y o u r f a r m i s b e in g m a d e in o u r f a ct ori e s a n d s o l d

d ir e ct t o t h e u s er o n a o n e pr ofit b a s i s
. I f yo u a r e b u yi n g
-
.

in t h e o ld fa s h i o n ed way yo u a r e p aying nee d le ss pr ofit s

-

pro fit s S im ply co n trib u t ed t o m i dd l em en b e ca u s e th ey can ,

n o t b rin g a p en n y s wo rth o f v a l u e o r s ervi ce whi ch yo u

’

c a nn o t o b t a i n f ro m u s pro fit s whi ch yo u mi ght a s we ll

—

kee p a t ho m e right in yo u r o wn p ocke t Be you r o wn

,
.

d e a l er
. B u y d ir e ct f r om t h e m aker s Y o ur s avin g will
.

m ak e a s u b s t an ti al a ddi ti o n to yo u r f ar m pr ofit s Writ e .

y o u r n am e a n d ad dr e ss o n t hi s car d a n d m ail t o us t o day

a n d a co p y o f this c at a l o g wi ll b e s ent yo u f r ee .

O ur Fr ee Sp eci a l C at a lo g o f Far m I m pl em ents co nt ain s

an a ss o rt m e nt o f hi gh gr a d e f a r m t o o l s a n d m an y o th er li n es
o f in t er es t to e very f ar m e r p r o d u cts O f o u r o wn f a ct o ri e s
, ,

that cann o t b e e x cell ed f or high q u ality o r lo w pri ce s in a n y

m a rk e t D on t b u y e l s ewh ere u n til yo u h ave o u r pri ce s
’
. .

I n d i cat e o n thi s car d t h e li n e s y o u a r e i n t er e st e d in a n d yo u ,

wi ll r e ceive o ur Sp eci a l C at al o g an d co m p let e i n f orm ati o n

b y r et u rn m ail .

Walk in g Pl ows Plant ers C r eam Se p ar at or s

Ridi n g Plows C u ltivat ors B uggie s
H arrows M ower s H arne s s
Dis c H ar r ows G a s o li n e E ngin es
We part i cu l ar ly u rge yo u to co ns id er yo ur far m im ple
m ent n e e d s n ow Fill o u t a n d r et u r n t h i s car d pr o m ptly
. .

We have a Speci al O ff er f o r E arly B u yer s whi ch will m ak e

it to yo u r a d va ntage t o let u s have your o rder n ow M ail .

t hi s car d t o d ay .

Ho w can J a m e s Wils o n a n im p l em ent r et a il er with ,

a typ i cal st o r e l o cat ed in a t o wn o f p o p u l ati o n

 RE TAI L TRA D E 75

in a ri ch fa rm in g di stri ct in K an sa s m ee t this, co m

p e titio n l?

47 . WE LL F LE E T C O M P AN Y— MA I L OR D E R
D E P AR TM E N T
T h e Well fleet C om p a ny , a l ar ge d ep art m e nt st o r e
in N ew Y o rk C ity , h as b een fill in g in ci d ent a l m a il
o r d ers fr om cu st o m e rs f o r s o m e y e ars T h e c o n d iti o n s
.

a r e n ow s u ch th a t if it is t o co ntin u e t o h a n d l e a n y

s u bst anti a l v o lu m e o f m ail o r d e r b u sin ess , a n ew p o li cy

m us t b e a d op t e d O n e p l a n th a t is b ein g co nsi d er e d
.

is to iss u e a l ar ge ca t a l o gu e twi ce a y ear , as is d o n e

by com p ani es th at co n d u ct a m a il o r d e r tra d e e x cl u
s iv ely . A n a lt ern ativ e p l a n is t o iss u e ab o u t twi ce a
m o nth an e i ght or t en p age c ir cu l a r o f s p eci al s al es in
th e v a ri o u s d ep art m e nts o f th e s t o r e z
.

Wh at is to b e s a i d for an d against each p l an ?

48 . E R I E C O MPAN Y —
SE LL I N G BY MAI L
T h e E ri e C o m p a ny m a n u f act u r e s a t o il e t a rti cl e
.

I ts p l a nt is l o ca t e d in C l e v e lan d , O hi o . I t is s eekin g
1Theod ore H Price . T he M ail O r d e r Bus in ess ,
“
The Outlook ,
Ja n u ar y 26 , 1 9 1 6
”
T . . M cAllis te r , T h e R e t ail M er ch an t , The
“

Ou tloo k , M arch 8 , 19 16 .

2 See “ De a rt m e n t Sto res as M a n uf ac t u r e rs ’ C o m e t it o rs i n M ail

p ” p
Or d er Activities , P ri nte rs I n k , M ar ch 30 , 1 9 1 6 , pp 6 1-68
’
. .
 6 MARK E TIN G PR O BL E M S
inf o rm ati o n o n th e o pp o rt u niti e s f o r s e llin g its p ro d u c t
by m a il l T h e a rti cl e will r e t a il fo r a b o u t sixty c ents
.
,

a n d th e r e is a lr e a d y q u it e a d em a n d fo r it b u t th e ,

E ri e C o m p a ny is in d ou bt a s t o wh e th er o r n o t a sin gl e
a rti cl e c a n p r o b a b ly b e s o l d a t this p ri ce by m a il .

Wh a t a r e th e ch an ce s f o r s u ccess in u n d ert aki n g to

s el l s u ch an a rti cl e by m ail ?

49 . SE LLI N G FA R M P R O DU C E BY M AI L
A m a rk e tin g d ivisi o n o f th e P o st O ffi ce D e p a rt
“
m e nt h as b e e n p r o p o s e d I ts p u rp o s e w o u l d b e to
.

”
p r o m o t e d ir e c t tr a d in g b e tw e e n p r o du ce rs a n d c o n
su m ers o f farm p r o d u ce by m ea ns o f th e m a ils ,
.

T h e f o ll o win g a r gu m e nt h as b e e n a d v a n ce d in its
fa v o r :

At thi s ti m e ab ou t 9 0 p er cent o f t h e worl d s who l es al e ’

tra d e i s d o ne thr o u gh e xhib iti on o f s am p le s whi ch t h e b u yer ,

b ears in hi s m in d Th en com e t h e o r d er s b y lo t nu m b er s
.

“ ”
a n d o r d er s by t e l egr a p h a n d o r d er s a ll wi th n o
—
o p en
higgling o r h aggling a n d n eve r in t h e worl d was who l es al e
,

b u s i n e ss b ett er p er fo rm ed An d in t h e r et aili n g o f s m a ll
.

p u r ch a s e s e s p eci a lly o f f o o d pr o d u ct s h o w m an y ho u s ewiv es

, ,

nowa d ay s go t o t h e m ark e t with m ar k et b as k et s o n th eir

a r m s a n d p i ck o u t th e ir o w n m e at s a n d v e ge t ab l e s ?
“ ”
SO w e s ee tha t t h e ti m e i s h er e f or o r d erin g b ut th e ,

tr u e way t o o r d er t h e m o s t e con om i c w ay t o o r d er i s fro m

, ,
“ ”
fir s t h an d s a n d thi s a pp li e s e s p eci ally t o f o o d pr o d u ct s
,
.

I n t h e d i s trib u ti o n o f f o o d pr o d u ct s if t h e e ffi ci en t m o d e o f
,

s e lli n g an d b u ying b e in o per ati o n it give s t h e e quiti e s b o th

,

t o pr o d u cer a n d t o c o ns u m er It d o e s m or e ; it fr e es t h e
.

f arm er f r o m t h e v e x a ti o u s a n d p er n i ci o u s l aw s o f chan ce ,

hen ce fro m i n j u s ti ce With chan ce a n d inj u sti ce elim i n at e d

.

f ro m e x h ange with t h e r u l e o f e ffici en cy a n d e q u ity in it s

,

p l ace it will n o t a l o ne m ake t h e f ar m er e co nom i c al ly s tr on ger

, ,

b u t it will d o m or e ; it will m ak e thi s n atio n str o nger a n d

1 Se e P ri n ter s I ’
n k, D ecem b er 4 , 1 9 1 9 , p 25 . .
 R E TAI L TRA D E 77

m ighti er than m ere fighti n g shi p s o r s o l di er s ca n m ak e it ,

a ltho u gh these to o sh o u l d b e h a d wh e n wa n t e d
, ,
.

( )
a I s t h e a r g u m e nt h e r e a d v a n ce d in f a v o r o f th e

p l a n v a li d ?
( )
b Whi c h o f t h e f o ll o w i n g m e th o d s o f o p e ra tin g
su ch a di visi o n by th e P o st O ff i ce D epa rt m e nt w o u l d
b e m o st fa v o r a bl e t o t h e s u ccess o f th e p r o j e ct ?
( )
1 T h e a ssist a n ce t o b e in t h e f o r m o f a br o k e r age
s e rvi ce with o u t ch a r ge .

( 2) T h e a ssist a n ce t o b e i n th e f o rm o f br ok e r age
a t 1 % o f t h e v a l u e o f t h e p r o d u cts .

( 3) T h e a ssist an ce t o b e in th e f o r m o f o u tri ght

p u r ch a s e a n d s a l e in t h e f o r m o f a f e d e r a l m a il
o r d e r e st ablis h m e nt .

50
. C O O P E R ATI V E ST O R E S
’
I n E n gl a n d th e d e v e l op m e nt o f c o ns u m ers co
o p e r a tiv e st o r e s h as b ee n co ns p i cu o u sly s u cce ssfu l
d u rin g th e l a st h alf ce nt u ry I n E n gl a n d a n d Sco tl a n d
.

in J a n u a ry 1 9 1 5 th er e w e re
, ,
r e t a il co op er a tiv e
st o r e s with m e m b er s l .

M o st o f th es e st o r e s in E n gl a n d ar e o rga niz ed o n
th e R o ch d a l e p l a n T h e e ss enti a l ch a ra ct eristi c s o f
.

th e R o ch d a l e p l a n ar e th a t th e o wn e rshi p o f th e st o r e
is v est e d e ntir e ly in co ns u m ers ; th a t cap ita l is p r o
v id e d by t h e m e m b e rs e a ch o f wh o m s u bs crib es f or
,

o n e o r m o r e sh a r es ; th a t t h e p ar v a l u e o f ea ch sh ar e

is s m a ll s e l d o m o v er
, O r d in a rily th ere is a
li m it t o t h e n u m b e r o f sh ar e s th a t a n y o n e m em b er
m ay h o l d .E a ch m em b e r h as o n e v o t e in th e m a n a ge
1 Coo er at i ve Who le s le S oci eties Li m ited A n ual Report 1 9 1 8
p a , ,
n ,

p 29 7
.
78 MARK E TIN G PR OBLE M S
m e nt of st o re irr e sp e ctiv e o f th e n u m b er o f sh ar es
th e
th a t h e h o l d s D ivi d e n d s u s u a lly ar e p a i d o n th e
.

sh a r es a t th e r a t e o f 5 o r T h e n et p r o fits o v e r
a n d a b o v e t h e d ivi d e n d s o n t h e sh a r e s a n d th e a m o u nt

th a t is s e t a si d e f or r e s erv e s a n d s u rp l u s ar e d is
trib u t e d to th e m em b ers in p r op o rti o n t o th e ir p u r
c h as e s .I n so m e s o ci e ti e s n o n m em b ers ar e gr a nt e d a-

d ivi d e n d on p ur ch as es at n o t o v er o n e h a lf th e r a t e -

p a i d t o m e m b ers .

M a ny o f th e s e co op erativ e s o ci eti es ar e m em b ers

o f th e wh o l es a l e coo p er a tiv e s o ci e ti es T h e E n glish .

C o op era tiv e Wh o l es a l e So ci e ty e st a blish ed in 1 8 64 , ,

h a d a m em b ershi p in 1 9 1 8 o f s o ci e ti e s ‘
T he .

Sco ttish C o op er a tiv e Wh o l e s a l e So ci ety in 1 9 1 8 h a d

a m em b e rshi p o f 26 1 s o ci eti e s T h e c o m bin ed s a l es.

a t wh o l e s a l e o f th es e two s o ci e ti e s in 1 9 1 8 a m ou nt e d
to G r o ceri es a n d p r o visi o ns m ak e u p
th e l ar ge st it em in th e ir b u sin e ss .

T h e wh o l e s a l e s o ci eti es a r e o r ga ni z e d o n th e sam e
p rin cip l e a s th e r e t ail coop e ra tiv e s o ci e ti e s I n ad di .

ti o n to p erfo rm i n g th e regu l ar wh o l es a l e fu n cti o ns ,

th es e wh o l es al e s o ci eti e s h a v e a ls o gr ea tly e xt e n d e d
th e ir activiti e s T h e E n gli sh C o op era tiv e Wh o l e sa l e
.

So ci e ty f or i n st a n ce op er a t e s s e v e r al fa ct o ri es f or
, ,

m a nu fact u rin g sh o es c rack ers,

ca n d y u n d e rw ea r , , ,

r ea d y to w ear c l o thi n g fu rnit u r e wir e m attr ess e s

- -
, , ,

bru sh es d r u gs co tt o n c lo th a n d fl ou r T h e s o ci e ty
, , , .

o wns f a rm s in E n gl a n d f o r t h e s u p p ly o f fr u it f o r th e

m an u f a ct u r e o f j am s a n d p r es erv e s a n d t o m a t o e s f or
ca nn in g I t op e r at e s h o t h o u ses a n d d a iry farm s I t
. .

o wns t ea p l a nt a ti o ns in C e yl o n a n d o p e r a t e s a fl e et

o f st ea m ers Sin ce 1 9 1 4 th e E n glish c o o p e r a tiv e

.

so ci eti e s b o th r e t a il a n d wh o l es a l e h a v e b e e n con
, ,

s p icu o u s ly p ro s p er o u s I n th e cou ntri e s o f c o ntin ent al

’
.

E u r op e th e co nsu m ers co o p er a tiv e m o v em e nt a ls o

’
,

h as d ev el op e d o n a l ar ge s ca l e .

I n th e Unit ed St at e s it was e stim at ed a few years

,

a go th a t th er e w e r e in th e n e i ghb o rh oo d o f

1 U S B u r eau o
. .
f Labor S tatis tics M on thly Labor Review A pril
, , ,

1 920 P 1 32
-da t e his t o r
y o f t he co o per at iv e m o v em e n t ,
2 For a n u -
p t o s ee
Al ber t So n ni chse n , C onsu mers Cooperatio n
’
.
 R E TAI L TRA D E 79

coo p e a r tive st o r e s A m aj o rity o f th es e st or e s h av e

‘
.

farm ers as m em b ers I n 1 9 1 8 th er e p r o b ably w er e n o t

.

m o r e th a n 250 co op era tiv e s o f in d u stri a l w o rk e rs in

th e Uni t e d St ate s z
A l arge n u m b er O f c o o p era tiv e
.

st o res h av e b een st a rt ed a t v a ri ou s ti m es in th e Unit e d

St at es o nly a few o f whi ch h a v e s u rviv e d f or a l o n g
,

p e ri o d .

Why h a v e n o t c oop e ra tiv e st o r e s d e v el op ed m ore

su cce ssfu lly in th e Unit ed St at e s ?

51 . C O O P E R AT I V E ST O R E S
N e w Y o rk C ity ,
D e c em b e r 1 1 , 1 9 1 6 .

B u r ea u o f B u si n es s R es ear ch ,

H arvar d Un iver s ity ,

C am bri d ge M as s ,
.

D ear Sirs :
I a m int erest ed in a cl ub whi ch cond u ct s a coo per ative
gro cery st o r e a n d wh o s e d ir e ct ors h ave a m b iti o n s t o e x p an d
,
.

In att em pti n g t o cu t pri ces o n wat che s they f o u nd t ha t t h i s

co u l d n o t b e d o ne with o u t b e ing r e f u s ed t h e ri gh t t o h a n d l e
them This b r o u ght them t o t he i d e a th at the y o u ght t o
.

a d o p t t h e R o ch d al e p l a n o f s elli n g a t cu rr e nt pri ce s a n d giv

in g d ivi d en d s T h e gro cery h a s b e en co nd u ct e d f or y ea r s
.

with s u cce s s b y s elli n g go o d s a t l e s s th an t he r egu l ar r et ai l

m arket r at e t h e cl u b charging h oweve r a co m m i ss i o n o f
, , ,

g t h e st a t us o f c oo pe r at iv e st o r e
1 T h ese st at e m e n ts r e ar d in s in
g
t h e Uni t e d St at es ar e b as e d c hie fl y u po n B u lle t i 3 9 4 o f t he Uni t ed n

St at es De p ar t m e n t o f Agric ul t ur e A S rvey of T ypi c l Cooper at e ,

u a iv

S tor es i n the U i ted S tat s b y J A Be e ll He c t o r M a c Phers o n a n d

n e ,
. . x ,

W H K err p u b lis hed N o v em b er

. .
,
A n a r d e n t e d o rs e m e n t o f n

t h e c oo pe r at iv e st o r e m o v e m e n t is gi ve n i n E m e rs o n P H a rr is ’
,
.

C ooper atio n the Ho pe o f the C o n s u me r Se e al s o Flo r e ce E P a r k e r n .

,
,
.

“
C o ns u m ers C o o rati v e Wh o les a le So cie t ies i n t h e Uni t e d S t a t es
’ ’
,

U S B u rea u of a bor S tati s ti cs M o n thly La bor Re vi eu Apr il 1 9 20

. .
, , , ,

pp 1 1.7-
1 28 .

D ur i n g 1 9 1 9 20, a s u bst a n t ial n um b er o f c oo pe r at iv e st o r es we r e

2
started ’u n der t he guid an ce o f u nio n lab o r m e n Fo r e xa m ple s ee .
,

P ri nter s I n k , M ar ch 1 1 , 1 9 20, p 8 4 . .
80 MARK E TIN G PR OB L E M S
So m e of us wo u l d like t o co n tinu e thi s m etho d o f
s ellin g a s o u r wive s wo u l d like to know wh eth er they a r e
,

ge ttin g thing s ch ea p er tha n a t p u b li c s t or e s o r n o t a n d li k e ,

t o know f o r a ce rt ai n ty w h ether th ey a r e go i n g to m ake b o th

e n d s m e e t a t t h e e n d o f t h e m o nth with o u t h avin t o m b l
, g g a e
o n wh a t t h e d ivi d e n d i s go i n g t o b e .At t he s a m e tim e o th er s ,

p o i n t o u t t h a t pra cti ca lly a ll s u ccess f u l c o o perative s o ci eti es

o pe r a t e o n t h e R o ch d a l e p l an . I sho u l d b e greatly o b li ged
for a n y inf o rm ati o n whi ch will hel p u s t o d e ci d e wi s ely in
regard t o changing from t h e pre s en t t o th e R o chd ale pla n .

Yo u rs very tr u ly ,

(s i gned) J am e s Brown
Wh at r ep ly sh ou l d b e m a d e to this l ett er ?

52 . C H A R LE S AR M ST R O N G —
SA L E S P LA N
T he fo ll o w in g in qu lr y w as r ece iv ed fr o m Mr .

C h arl es Ar m str o n g in 1 9 1 9 :
,

I a m t aki n g th e lib erty o f a sking you a q u es tion o r t w o .

In yo u r st u dy o f t h e m e rchand i s in g m eth o d s o f f o o d b u s i
ness ge nera lly have yo u r un a cro ss an y ca s e s o f co o perative
,

s t ore s a n d a l s o a n y cas es o f st ore s o p erat e d by ind ivi d u al s

p u r p orting t o b e s e lli n g m e r ch an d i s e a t co s t pri ce s ( p l u s
c arri a ge ) wh er e t h e privil e ge is a c co r d ed t h e cu s t o m e r o f

b u yi n g f ro m thi s p arti cu l ar s t o r e o r wa r eh o us e in c o ns i d er a
ti o n o f a s ale o f a cert a in c ertificate f or s ay a ye arly p eri od
a m o u n ti n g t o a d efin it e fix ed s u m s ay , or a
year o r what ever it m ay b e In o ther word s th e i d ea as
.
,

repre s ent e d by t h e l att er n am e d m etho d is o n e o f selli n g

a d e finit e n u m b er o f c erti ficat e s f o r a d efi n it e s u m in o r d er
to get t o get h er t h e wo rk i n g ca pit a l u p o n whi ch t o d o b us i
nes s an d co n si d eri n g t h e inco m e r eceived fr om t h e s al es of
c erti ficat e s a n d t h e d i s co u n t o f m er ch a nd i s e as t h e o nl y

i n com e a n d t he a ct u al ex pens e s o f d oing b u sines s as a d ed u c

 R E TAI L TRA D E 81

ti o n fr om s am e . Of co u r s e t he s e con d year s s al e
,
’
of
cert ifi cat es wo u l d m ea n a l ar ger profit .

I s this p l a n p r ac ti ca ?l

53 . R E T A I L P UB LI C M A R K E T
A ity m ark e t was o p e n e d in O kl ah o m a C ity i n
c

1912 I t co nsist ed o f st a n d s o n o n e o f th e wi d est

.

streets I t was an O p e n air m ark e t

.
-
.

Thi s m arket w as e s t ab li she d M ay 2 1 a n d 8 0 s t all s wer e

o c c u pi e d By t h e m i d d le o f A u gu s t t h e n u m b e r o f st al ls i n
.

u s e w as 3 1 8 th e s e e xt e n di n g a l o n g 3 b l o cks o f t h e str eet

,
.

T he peo pl e of O k l ah o m a C ity ar gu e tha t t h e wo nd er f u l

s u ccess o f t he stre e t m ark et i n d i cat e s t h e ne ed o f a m ark et
ho u se wherein pro d u ct s s u ch a s m eat fis h b u tt er e ggs , , , ,

po u ltry v eget ab l e s a n d fr u it s m ay b e s o l d
, , O k l ah o m a .

C ity is t o d ay e x peri en ci n g t h e s am e f eeli n g tha t h as e x i st e d

in a ll of th e citi e s where m a r k et s wer e O p en e d ; t h at i s t h e
im p ortan ce o f d ire ct co n t a ct o f pro d u ce r a n d c o n s u m er a n d ,

it b eho ove s Oklah om a C ity t o s e e t h at t h e m i dd le m a n a n d

t h e h u ckst er d o n o t cr owd t h e pro d u cer o u t o f t h e s e lli n g
m ark et .
1

How m i ght this d ir e ct nt a ct b e p r e s e rv e d ? O n

co

wh a t w o u l d th e s u ccess o f a n e n cl os e d m a rk e t o f
p r o d u ce rs d ep e n d
?

1 Re r t M a yo r s M ar k e t C o m mi s io n N e w Y o r k 1 9 13 p 7 7
’
s , , , . .

Ot he r r e er en ces o n p ub l c m ar k e ts i cl u d e : U S B u r u of the C ns u
i n . . ea e s ,

“
M u ni ci pal M ar k e ts i n C it i s Ha i g a P o p ul at io n o f O v e r
e v n
C it y Pla n ni n g Bo ar d M a r ke t S t ua tio n i n Bosto n ; G V Br a nc h
,
i . .
,

t ail P u b lic M ar k e ts U S Depa rtmen t of A gricu lt u re Yea r Boo k

‘‘

g
fi
.
, ,
.
,

I
82 MARK E TIN G PR O BLE M S
54 . R E T A I L M I LK T R A D E
A cco r d in g t o a r ep o rt o f th e M ass a ch u s etts A gri
cu lt u r a l E x p e ri m e nt St a ti o n th e c o st o f d istrib u tin g

m ilk a t r e t a il by m o r e th a n e i ghty d istrib u t o rs s o m e ,

o f th e m p r o d u cers a n d s om e o f th em d ea l ers w a s ,

c e nts p er q u a rt in 1 9 14 1 5 in S ix c iti e s a n d t o wns

—
,

in M as sa ch u setts l This c o st in cl u d ed l ab o r d ep r eci a

.
,

ti o n o f e q u ip m ent m aint en a n ce s u pp li es ba d d ebts

, , , ,

r e nt int e r est t ax es insu r a n ce a n d s om e o th er s m a ll

, , , ,

it em s I t wa s co n clu d e d th at l ab o r co nstit u t e d thr ee

.

fif th s o f th e d e liv ery co st .

Fo r b u sin e ss es o f v ari ou s siz e s it was st at ed th a t

th e r e t a il d eliv e ry co st p er q u art w as ce nts wh e n

th e b u sin e ss w as u n d er 500 q u arts p er d ay ; ce nts

p er q u art f or b u sin ess e s h a n d lin g 500 1 000 q u arts

—

d a ily ; ce nts p er q u a rt f o r q u a rts

d a ily ; ce nts p er q u a rt f o r b u sin e ss e s h a n d lin g

o v er q u a rts d a ily .

This inv e sti gati o n co n cl u d ed th a t u n d er com p etitiv e

co n d iti o ns m ilk r e t a ilin g s er vi ce is f airly s atisfact o ry ,

in as m u ch as th e co nsu m er u su ally r eceiv es his mi lk

o n ti m e a n d in s u ch q u a ntiti e s as h e r e q u ir e s He h as .

th e o p p o rt u nity o f ch a n gin g fr o m o n e d ea l e r t o a n o th e r
if th e q u ality is n o t s atisfact ory N e verth el ess th e .
,

fo llo win g c o n clu si o n wa s d r awn

A ft er a ll i s s ai d th e a d equ at e s ol u ti o n o f m ilk d istr ib u

,

ti o n will com e o n ly thro u gh m u n i ci pa l d elivery or t h e o rgan

iz at ion o f t h e m il k d i s trib u t or s I n s m a ll citi e s a n d t own s
.

co o p er ativ e m ilk p l a n t o wn e d a n d m ana ge d by t w o o r

t hr ee m en is very feas ib l e O n e plan t co u ld e a s ily d eliver
.

t h e n e ce ss ary to q u art s p er d ay an d s o lve m o s t

if n o t a ll t h e pr ob l em s o f e co no m i cal a n d a d eq u at e d elivery .

T h e pr o b l em o f m ilk d i strib u ti o n in large citi e s i s d iffi

cu lt b u t t h e o r gan iz ati o n o f t h e s m a ll m ilkm en o p er atin g in
,

l arge citi es i n t o a s i n gl e d i strib u ting agency wo u ld cu re m any

ill s an d b rin g ab ou t cheaper d elivery .

T h e comm itt e e o f th e Bo st o n C h a m b e r o f C om
m er ce in its r ep or t J u ly 1 9 1 5 st a t e d th at th e d e al e rs
z
, , ,

1 C o st o f Distri b u t in g Milk i n Six Cit ies a n d T o wns i n M as s a

“

ch us e tt s
”
M as s ach u se tts Agricult ur al E xpe r im e n t St a t io n B ulleti n
, ,

N o 1 73
. .

2 B ost o n C h am b e r of C om m er ce , R eport on M i lk and C r ea m .

 R E TAIL TRA D E 83

l i m e d th a t a centra l d eliv e ry w o u l d n ot r ed u ce
c a

e xp ens e s d es p it e t h e d u p li cat i o n o f d e liv e ry o n ce rt a in

str ee ts Th e ir r e as ons w e r e th e f o ll owin g :

.

( 1 ) E ach c o m p a ny w ou l d h a v e t o m a int a in m o t o r
tru ck s o r h a v e h o rs es a n d t e ams t o carry its p r o d u ct
t o th e ce ntra l p l a nt whi ch w ou l d b e us el ess t h e r e st
,

of th e d a y .

( 2) T h e l oa d cou ld n o t b e a rr an ge d t o carry v ari o u s

nu m b ers o f d i ff er e nt S iz ed b o ttl e s .

( 3 ) T h e cu st om e r cou l d n o t s e cu r e extra m ilk with

o u t n o ti ce a s th e drive r c ou l d n o t ca rry e xtra mi lk
,

for all d ea l ers .

(4 ) Th er e w o u l d b e a s eri ou s l o ss in b o ttl e s b e cau s e ,

o f th e d iffi cu lty o f s u p ervisi o n a n d l ack o f int e r e st .

( 5) E ach d eal er s d riv e r n ow a cts a s a s o li cit o r f o r

’

n e w tr a d e a n d c o ll ects bills a n d b o ttl es I t wo u l d b e

.

n ecess ary t o hir e a n ad d iti o n al m an t o do t hi s un d er a

syst em o f c entra l d eliv e ry .

( 6 ) T h e c o st o f a d v ertisin g w o ul d b e in cr ea s ed .

Fr om this e vi d en ce wh a t c o n cl u si o ns ar e t o b e
,

d rawn r egard in g th e p ra cti cability o f th e co op era tiv e

d elive ry syst em in th e m ilk tra de ?

55 . BA G C O A L
I n D e cem b er 19 1 6 a s eri ou s coa l sh ort a ge exist ed
, ,

in N ew E n gl a n d as w e ll as in o th er p arts o f t h e Uni t ed
St a t es. Pri ce s h ad b ee n a d van ced a n d th e r es erv e ,

st o cks o n h an d in B o st o n w er e u n u s u ally s m all .

Tra nsp ort ati o n co n di ti o ns w er e p r e cari ou s a n d i t w as ,

b e li ev ed th a t a p e ri o d o f b a d w eath er with s e v er e c o l d
, ,

m i ght e xh au st th es e r e s e rv es .

A t th at ti m e as p re vi ou sly a l ar ge n um b er o f con
, ,

s um ers in th e p oo r er d istri cts i n B o st o n w ere in th e

84 MARK E TIN G PR OBL E M S
h abit o f b u yin g c o a l fr o m p e d d l ers o r gr o cers in tw enty
fiv e p ou n d b a gs a t 4 0 60% a b o v e t h e t o n p ri ce
—
. T he
p ed d l e r b ou ght c oa l fr o m t h e l ar ge c o a l r e t a il e r in t o n
l o ts a t a r e d u cti o n in p ri ce o f s e v enty fiv e cents a t o n
-
.

T h e p e dd l e r b a gge d t h e c o a l a n d d istrib u t ed it . In
D ecem b e r 1 9 1 6 t h e r e t a il p ri ce f o r c oa l in t o n l o ts
, ,

wa s T h e p ri ce o f b a gged c oa l in Bost o n was

s e v e nt ee n cents fo r tw e nty fiv e p o u n d s
-
.

T h e C om m issi o n o n t h e C o st o f Li vin g s u ggest ed

th a t e v ery coa l r et a il er sh ou l d o ffer t o s e ll co al in
tw enty fiv e p o u n d l o ts a t t h e t on p ri ce ; th at is for
-
,

tw elve c ents f or tw e nty fiv e p ou n d s a t his y ar d t o

-
,

cu st o m e rs brin gin g th e ir o w n c o nt a in ers a n d carryin g

th e c o al h om e . O n e l ar ge c o m p a ny w ith s e v era l y ar ds
in th e c ity h ad n o faciliti es fo r h a n d lin g tw e nty fiv e -

p ou n d l o ts . Up t o th a t t im e it h a d s o l d c o al o nl y in
l o ts o f o n e h alf t on a n d u p w ar d s I t h ad a su b st a n
-
.

ti a l b u sin ess with co a l p e d d l ers .

Wh a t a ttit u d e sh ou l d th e c om p any h av e t ak e n
t o w ar d th e s u gge sti o n m a d e by th e C o st o f Livi ng
C om rn issio n ?
 P AR T I V

WH O L E SA L E T R A D E

HE p r obl em s in this s ecti o n illu stra t e the fu n c

ti o ns s e rvi ces an d costs o f wh o l es a l e m er ch a nts
, , ,

c o o p e ra tiv e b u y in g a ss o ci a ti o ns o f m e r ch a nts ,
’
m an u fa ct u r ers wh o l es a l e bra n ch es m er ch a n d is e b r o ,

k ers c om m issi o n ag ents comm i ssi o n m er ch ants p r o

, , ,
’
d u ce rs c o op era tiv e a ss o ci a ti o ns a n d o th er agen ci es ,

e n ga ge d in wh o l e s a l e tr ad e l .

56 . C ON C O R D H O S I E R Y C O M P AN Y —
D I STR I BUT I O N
T h e C o n co r d H o si ery C om p a ny , m an u fact ur in g
m e d i u m -p ri ce h o si e ry for m en a n d w om e n , is s e ekin g
n a ti o n al d istrib u ti o n T h e p ro d u ct is t o b e wi d ely
.

a d v e rtis e d u n der th e m a n u fa ct u r er s bra n d

’
T he .

c o m p a ny h as a l arge m il l a n d str o n g fin a n ci a l r es ou r ce s .

Wh a t a v e n u es o f d istrib u ti o n a r e o p e n t o this
co m p a ny ? Wh a t ar e th e a d va nt ag e s o f e ach ?

1 Gen er al re fer e nces o n who les al e tr ad e are : Bu t ler De Bo wer a nd ,

Jo n es M a r k eti n g M ethod s
, P T C h e ri n gt o n Ad ve rtis i n g as a B us i nes s
. . .
,

Fo r ce a n d T he Wool I nd u stry A W S h a w C o m p a n y How to R u n a

. . .
,

Whole s a le B us i n es s D u n s R e view, A u g ust 23 1 9 1 3 p 1 7 B ur e a u

.
’
, , . .

o f B us m ess R es e ar c h H ar v ar d Um v erS I t y B u lleti n N o S ystem of

“
, ,
.

A ccou n ts f or S hoe Whole s ale r s ; B ul leti n N o 8 S ste m of O cr ati n g

” “
.
,
A ccou n ts f or Who le sa le Grocer s ; B u llet in N 0 9 p er ati ng x pen s es
.
,

i n the Who les a le G r ocer y B us i n es s Bu lleti n N o 1 4 M ethods .

,

of P a yi n g S a le s m en a d O ati n g E x p ens e s i n the Who le s a le G r oce r s

n

B usi n es s i n B u lleti n 0 19 Operati ng E xpens es i n the Wholes ale

.
,
Gr ocery Busi ne ss i n
86 MARK E TIN G PR O BLE M S
57 . J AFFR E Y SH O E C O M P A N Y —
R E L AT I O N To

W H O L E SA LE R S
T h e J a lf r e y Sh o e C o m p a ny o p e ra t e s a sh o e m a n u
’
factu r in g b u sin e ss in B o st o n I ts p ro d u c t is w o m en s
.

sh o es o f lo w p ri ce q u a lity This m a n u fa ct u r e r n o w
-
.

s e lls e ntire ly t o wh o l es a l ers h avin g a b o u t sixty wh o l e

,

s a le cu st o m ers O n e s a l es m a n a n d o n e o f th e o ffi ce rs
.

o f th e c o m p a ny p e rfo r m all t h e s a l e s w o rk .

Wh a t w ou l d b e inv o lv e d if this c o m p any w e re t o

e il
c h a n ge its p o li cy t o s llin g d ir e ct to r e ta er s l ?

58 . D O V E R C O M P AN Y— M E TH O D OF DI STR I B UT I O N
T h e D ov r C o m pany , with a n a v er age siz e p l a nt ,
e -

ha s b e e n o r ga niz ed t o m a nu fac t u r e m ed i u m p ri ce -

’
wo rkm en s s h oes Th es e sh oes ar e to b e s o l d u n
.

bran ded .

Wh at class o r cla ss es o f ret ail st ore s m ay b e exp e ct ed

to di strib u t e this p r o d u ct ? Ho w can t h e s h o es b e
d istribu t ed to th es e st o r e s m o st e co n o m i cally ?
1 See U S De p art m e n t o f C o m m e r ce , M is cellaneous S erie s
als o . .

N o 3 2, T he K n i t Un d er wea r I n d u s try J G eo r e Fr ed e rick ,

“
Why
Selli n g Re t ai le r is Be comi n g P o pular ,
”
,
g
P ri nter s I n k , Febr uary 1 3,
1 9 1 3 , pp 1 7-20
. .
 WH O L E SAL E TRA D E 87

59 . WO O D C O C K E LDR I DG E —
M E THOD OF
D I ST R I B U T I O N
T h e fir m o f W o o d co ck E l d ri d ge h as a m e d i u m
siz e p l ant in M a ryl a n d , fo r c a nnin g t o m at o e s This .

fir m c o m p et e s with o th e r ca nn e rs in M a ryl a n d a n d
o th e r e a st e rn st a t e s a n d a ls o with C a lif o rni a c a nn e rs .

Ab ou t o n e h a lf the a nnu a l p ack o f t o m at o e s is

-

n o w p a ck e d in M a ryl a n d R ece ntly , h o w e v e r , C a li

.

f o rmi a t o m at oe s h a v e b e co m e s e v er e c o m p e tit o rs o f t h e
M a ryl a n d t o m at o e s C o sts o f p r o d u cti o n ar e s a i d to
.

b e l o w e r in C a lif o rni a , b e ca u s e o f l a r ger p r o d u cti o n

p er a cr e a n d a ls o gr e a t e r r e gu l a rity in p r o d u cti o n .

Th er e is a l a rge a v a il abl e a cr eage fo r e x p a nsi o n in

C a lifo rni a T h e ca nnin g e st a blish m e nts a r e m o r e u n i
.

fo rm in th e ir o p e ra ti o n a n d m o r e n early st a n d ar d iz e d
in C a lifo rni a th a n in M a ryl a n d T h e C a lif o rni a
.

t o m a t o is m or e a ttr a ctiv e in app e ar a n ce Aft er .

ca nnin g it is fir m e r , m o r e m ea ty , a n d l e ss w a t ery

th a n th e M aryl an d t o m at o T h e M aryl an d t o m at o ,
.

n e v e rth e l ess , h a s a s u p eri or fl av o r ‘

.

Pr o vi d e d W o o d co ck E l d ri d ge d o n o t ch o o s e to
s e ll th e ir p r o d u c t t o ch a in st o re s , wh a t will th e y ga in
by s ellin g d ire ct t o r et a il e rs ? Wh a t will th e y ga in by
s e llin g t o wh o l e s a l e rs o nly ? Wh i ch is lik e ly t o b e th e
b ett e r p o li cy ? I f this firm d e ci d e s t o s e ll t o wh o l e
s alers o nly , b e tw e e n wh a t typ e s o f wh o l e sa l ers h as it
a ch o i ce ? Wh at a d va nt age s d oes e ach typ e o ff e r ?

60 . LACO N I A C O M P AN Y —
M E T HO D OF D I S T R I B UT I O N
T h e L a co ni a C o m p a ny h a s b ee n o rga niz e d r e ce ntly
to m a nu fa c t u r e a n e w c l e a nin g c o m p o u n d , diff er e nt
fr o m a nythin g o n th e m a rk e t This co m p ou n d is.

1 N ew Yo r k Jou rna l f Co mmer ce

o ,
A pr il 3 , 1 920, p . 12
.
88 MARK E TIN G PR OBL E M S

p a t ent e d an d
it is th e o nly p r o d u ct n ow m a de by this
c o m p a ny I t is b ein g intr o d u ce d first in B o st o n a n d
.

l a t er will b e s o l d in o th e r p arts o f th e Unit ed St at e s .

This c om p any is c o nsi d erin g wh eth e r it will b e

b ett e r p o li cy t o u n d ert ak e t o s ell d ir ect t o r e t a ilers o r
to wh o l e s a l ers Wh at a r e th e o bj ecti o ns t o d is tribu
.

tin g thr o u gh wh ol e s a l ers ? Wh at ar e th e o bj ecti o ns

to s e llin g d ir e ct t o r e t a ilers ?

61 . C O N GR E S S W H O LE S A L E GR O CE R Y C O M P AN Y
R E LA T I O N To C O M P A N Y ST O R E S AN D M E E TI N G
N E W C OMP E T I T I ON
T h e C o n gr ess Wh o l e s al e G r o cery C om p any lo
c a te d in C hi cago h as a nn u a l s a l e s o f app r o x im a t ely

T h e c om p a ny s O p era tin g e xp ens e is

’

a b ou t o f n e t s a l e s a n d its gr o ss p r o fit

I t h as a l ar ge v o lu m e o f b u sin ess in st ap l e an d m edi u m

p ri ce gr o ceri e s I t a ls o im p o rts l a rge q u antiti e s o f
.

co ff ee ,
t e a , an d o th e r f o r e i gn p r o d u cts , a n d h as an
e xt e nsiv e b u sin e ss in p riva t e br a n d s o f go o d q u a lity .

I ts s al e s ar e t o t hr ee m a in gr ou p s o f cu st o m ers :
( 1 ) l o cal r e t a il ers ; ( 2) r et ail ers in m any p arts o f th e
Unit ed St at e s o u tsi d e th e l o cal distri ct ; (3 ) h o t els ,
st eam ship s , a n d instit u ti o ns .

D ur in g t h e l a st t en y e ars th e s a l es o f t hi s com p a ny
h av e in cr eas ed h e a vily T h e s al e s t o l o cal r et ail ers ,
.

whi ch n ow am ou nt t o ab ou t o n e- thir d o f th e t o t al
b u siness , h av e in cr eas ed o nly in p r op o rti o n t o th e
in cr eas e in p ri ce s I n o th er w o r ds , th e p hysi cal v ol
.

u m e o f s a l e s t o l o ca l r e t ail ers h a s r em a in e d p ra cti cally

co nst ant .

T he s al es to tsi d e r e t ail e rs h av e sh o wn gr eat er

ou

in cr eas e b u t
, it is b eli e ved th at th e lim it h as n ear ly
 WH O L E SAL E TRA D E 89

b e en r each e d f o r th es e s al es Fr ei ght r a t e s co nstit u t e

.

a s e ri ou s o bst a c l e t o f u rth e r e x p a nsi o n o n a l ar ge ,

s cal e o f s a l es t o r e t a il ers o u tsi d e th e l o ca l d istri ct

,
.

T h e s a l e s t o h o t e ls st eam shi p s a n d instit u ti o ns

, ,

h av e sh ow n th e l argest in cr ea s e d u rin g th e l ast t e n

y ea rs Th e s e s a l es n o w a m o u nt to a b ou t f orty p er
.

ce nt o f th e t o t a l s a l e s o f th e c o m p a ny T h e co m p e ti
.

ti o n f or this tra d e h a s b eco m e k e e n h o w ev e r a n d it , ,

d o es n o t a p p ea r th a t it r ea d ily can b e exp a n d ed a t

a r ap i d r a t e .

Within th e l o ca l t e rrit o ry th e n u m b e r o f c h a in
st o r e s h as b ee n gr o win g N u m er o u s u nit st o r e s fur
.
,

th er m o r e p arti cu l a rly th o s e in a str o n g fin a n ci a l p o si

,

ti o n h av e j o in e d c o o p e ra tiv e b u yin g a ss o ci a ti o ns At
,
.

th e p r es e nt t im e in this d istri c t th e r e a r e a s u bst a nti a l

n u m b e r o f com pa ny st o r e s th a t h a v e b ee n o rga ni z ed
u n d e r th e s u p e rvisi o n o f m a n u f a ct u rin g a n d p u bli c

u tility c o m p a ni e s t o s e ll m e r ch a n d is e t o th e ir e m p l o y ee s

a t a sli ght a d v a n ce o v e r wh o l e s a l e c o st So m e o f th e .

co m p a ny st o r e s h a v e b e e n d is co ntin u e d b u t in t h e ,

a ggr e ga t e th e y n ow h a n d l e a s u bst a nti a l v o l u m e o f

b u sin e ss As a m a tt e r o f p o li cy this wh o l es al e com p a ny

.

n e v er h as s o l d m er ch a n d is e t o th e s e com p a ny st o r e s .

Som e o f its chi ef co m p e tit o rs with wh o l es a l e b u sin e ss es

,

o f sim il a r ch a r a ct er f or s e v er a l y ears r egu l a rly h a v e

,

a ccep t e d o r d ers fr o m c o m p a ny st o r es .

Sh ou l d th e C o n gr e ss Wh o l es a l e G r o cery C o m p a ny
n o w s o li cit o r d ers fr o m co m p a ny st o r e s ?

Wh a t p o li ci e s can th e c o m p a ny a d v a nt a ge o u sly
a d o p t f o r s a f e gu a r d in g a n d d e v e l o p in g its b u sin e ss in

o th e r d ir e cti o ns ? Wh a t p o li cy is lik e ly to b e t h e b e st ?

62 . H UR O N FL O U R C O M P AN Y R E LAT I O N
—
TO

C O O P E R AT I V E ST O R E S
T h e H u r o n Fl o u r C o m p a ny of B u ff a l o is e n ga ge d

in th e wh o l e s a l e fl o u r b u sin ess . T he co m p a ny s e lls

90 MARK E TIN G PR OB LE M S
m a nu factu r e rs bra n d s a n d a ls o its o w n p riva t e br a n d s
’

o f fl ou r Up t o th e p r es e nt ti m e it h as s o l d t o a few
.

’
co ns u m e rs c o o p e r a tiv e st o r e s a s w e ll as t o u ni t st o r e s

an d b ake ri es .

’
I n 19 1 9 s ev era l n ew co nsu m ers c o op er ative s o ci e
,

ti es O u th e R o ch d a l e p l a n w er e o rganiz e d in its
, ,

t errit o ry by m em b ers o f l ab o r u ni o ns T h e H u r o n .

Fl o u r C om p a ny a ccep t e d o r d e rs f o r fl o u r fr o m th e s e
st o re s in a c co r da n ce with its p r e vi o u s p o li cy H ith ert o .

n o O bj e c ti o n h a d b e e n r a is e d by t h e p r o p ri e t o rs o f u nit

st o r e s aga inst s a l e s t o c o op era tiv e s o ci e ti e s I n th e .

la tt e r p a rt o f 1 9 1 9 h o w e v er th e H u r o n Fl ou r C o m p a ny
, ,

a n d o th e r wh o l e s a l e rs s e llin g fl ou r r ece iv e d a r e q u e st ,

fro m a n ass o cia ti o n r ep r es e ntin g a s u bst a nti a l nu m b e r

o f u nit st o r e s th a t th e wh o l es al ers sh ou l d ceas e th e
,

s al e o f fl ou r t o coop era tiv e st o r e s Th e s e c o o p er a tiv e

.

“
st o r e s w ere l o o k ed u p o n by th e u nit st o r e s a s irr eg
”
u l ar d ea l ers .

Wh a t p o li cy sh ou l d th e H u r o n Fl o u r C o m p a ny
h av e a d op t ed u p o n r ece ip t o f this r e qu e st fr o m th e
u nit st o r e a ss o c i a ti o n ?

63 . P R A I R I E DR Y G O O D S C O M P A N Y —
FI LL -
IN -
OR D E R S
T he Pra iri e D r y G o o d s C om p a ny dry go o d s ,

wh o l e sa l e rs l o ca t e d in o n e o f th e citi e s o n t h e M iss o u ri
,

Riv er c o v e rs t e rrit o ry within a r a d i u s o f 500 m il e s

,
.

T h e a n n u a l s a l e s o f t h e c o m p any ar e a b ou t
T h e cu st o m e rs ar e p ri m a rily s m a ll d r y go o d s st or e s
a n d gen e ra l m er ch a n di s e st o r e s .

’
I n th e t err it o ry th at is co v er e d by this wh o l es a l er s
s a l e sm e n ar e l o ca t ed a s ub st a nti al n u m b e r o f m ed iu m
siz e d ep a rt m e nt st o r e s Th es e st or e s r e gu l arly p l a ce
.

o r d ers with m a n u f act u r ers a t t h e b eginnin g o f ea ch

 WH O LE SAL E TRA D E 91

s eas on for 35 to 50% o f th eir n o rm a l s eas o n s pu r ch as es

’

o f d ry goo d s .

Sh ou l d this wh o l es a l e r s o li cit fill in o r d ers fr o m

th e d ep art m ent st o re s ?

64 . C A LV E R T C O M P AN Y —
R E T AI L B R A N C H E S
T h e C a lv ert C om p a ny , op er a tin g a wh o l es a l e e l e c
tr ical s u pp ly b u sin e ss in B a lti m o r e , d e s ir e s t o e xp a n d
its s a l e s I t is s u bj ect t o k ee n c om p e titi o n Am o n g
. .

t h e r et ail e rs in its t errit o ry , f u rth er m o re , th er e is o ft e n

tim e s a s ev ere cu tting o f p ri ces .

T h e C a lv e rt C om p a ny h as a n e x cl u siv e agen cy in
its t errit o ry fo r th e p r o d u cts o f o n e o f th e l a rge m anu
fa ctur ers o f e l ectri ca l s u pp li e s This t errit o ry is
.

cl early d e fin e d , an d t h e C a lv e rt C o m p a ny is n o t p er

m itte d t o infrin ge o n th e t e rrit o ry o f wh o l e s a l ers wh o

h a v e S im il arly e x cl u sive ri ghts in n e i ghb o rin g s ecti o ns
o f t h e c ou ntry T h e C a lv e rt C o m p a ny , f o r i n st an ce ,
.

is n o t p er m itt ed by th e m a n u fa ct u r e r t o s o li cit o r d ers

f or th e e x c l u siv e a gen cy goo d s in th e t errit o ry assi gn ed
t o th e Phil a d e lp hi a a gent .

E a ch o f th e s a l e s m e n o f th e C a lv e rt C o m p a ny c o v ers
his r ou t e o n ce a w e ek T h e s a l es m e n a r e ex p ect e d t o
.

b e o n th e wa t ch fo r n ew o p p o rt u niti e s f o r s el lin g, a n d
n ewsp ap ers a n d o th e r s ou r ce s ar e st u d i ed c ar efu lly to
l ear n in a d v a n ce o f l ar ge c o ntra cts t o b e le t .

I n o r d e r t o e xp a n d its b u sin ess , sh o u l d th e C a lv ert

C o m pa ny e st a blish r e t a il br a n ch es whil e c o ntin u in g to
s ell to o th er st or es a t wh o l e s al e ?
92 MARK E TIN G PR OB LE M S
65 L O M BA R DY C O MP AN Y —
E x c LU S I V E WH O LE S A L E
A GE N C Y
A n ew b a kin g p o w d e r w as p u t o n th e m a rk e t in
1 9 1 5 by t h e L om b a r d y C o m pa ny whi ch h a d l o n g b ee n ,

e n gage d in t h e m a n u f a ct u r e o f p r o d u cts o th e r th a n

foo d st u ffs D u rin g th e first tw o yea rs t h e s a l e O f th e

.

p r o d u ct w as c o nfin e d t o t e rrit o ry i m m e d i a t e ly c o n
tigu ou s t o N e w Y o rk T h e o bj e c t w as t o m ak e a n
.

a ct u a l ,
e x h au stiv e t e st O f th e s a l e s p r o bl e m s b e f o r e

e nt e rin g a br o a d e r m a rk e t .

Wh e n th e c o m pa ny h a d r e ach ed th e p o int W h er e
it wa s r ead y t o e nt er n ew fi e l d s it face d a s eri ou s ,

p r obl em .I t h a d n o s a l e s o r ga niz a ti o n for wi d e d is

t r ib u tio n I t h a d s o l d u p t o th a t ti m e thr ou gh
.

wh o l es al ers O n e o f t h e q u e sti o ns w as wh eth er th e

.

co m p a ny sh o u l d s e n d o u t s p e ci a lty s a l e s m e n o r c o ntin u e

t o d istrib u t e thr ou gh wh o l e s a l ers .

M a ny o f th e wh o l es a l ers p arti cu l arly th e l a rge , ,

str o n g firm s h a d th e ir o w n p riv a t e br a n d s o f b a kin g

,

p o w d er . I t was e x p e ct ed th a t th e y w ou l d b e r el u ct a nt
t o p u sh th e p r o du ct o f this m a n u fa ct u r er T h e r et a il .

a n d wh o l es a l e p ri ces o f this m a u f act u r er s p r o d u ct

’

n
wer e fix ed s o as t o yi e l d go o d m ar gins O f p r o fit .

T h e Lo m b a r d y C o m p a ny d es ir ed t o e x p an d its
m a rk e t t o th e M i dd l e W e st a n d t o th e P a cifi c C o a st .

A t th e s am e ti m e it W ish e d t o a v o i d th e e xp e ns e o f a
h ea vy ad v ertisin g a n d s e llin g c am p ai gn .

T h e Lo m b a r d y C om p any p r op o s e d t o o n e o f t h e
l ar ge st firm s o f w h o l es a l e gro cers in C hi ca go th a t this
wh o l e s al e r Sh o u l d b e giv e n t h e p rivil ege o f actin g a s th e
s o l e d istrib u t o r in th e C hi cago t errit o ry T h e Lo m .

b a r d y C om p any s cap acity w as lim it ed a t th e ti m e

’
,

an d t h e wh o l e s a l e r w a s t o h a v e t h e ri ght t o a c t a s

s o l e di stribu t o r a s l o n g a s b o th th e m a nu fa ct u re r a n d
wh o l es a l e r w ere s ats ifie d T h e wh o l e s a l er was a d vis e d
.
,

h ow e v e r th a t as s o o n a s th e L o m b ar d y C o m p a ny c o u l d
,

m a n u fac t u r e m o r e b a kin g p o w d er th a n th e wh o l e s al e r
c ou l d s e ll o th er d istrib u t ors w o u l d b e s ou ght in
,

St P a u l O m ah a St L ou is a n d o th e r c iti es a n d th a t
.
,
.
, ,

e v e nt u a lly t h e p r o d u ct p r o b a bly w o u l d b e s o l d t o all

wh o l es al e gr o cers .
 WH O L E SAL E TRAD E 93

Sh ou l d th e wh o l es al e gr ocer in C hi cago h a v e
accep t e d th e O ff e r t o b e co m e t h e e x cl u siv e d istrib u t o r

o f th e L o m b ar d y b a kin g p o w d e r u n d e r th e s e co n d iti o ns ?

66 . C H I C K AM A U GA C O M P AN Y —
SP E C I A LT Y SA LE S ME N
T h e C hi ck a m au ga C o m p a ny , m a n u fa ct u rin g p ack
a ge d f o o d st u ffs th a t a r e wi d e ly a d v e rtis e d , d istrib u t e s

its p r o d u cts thr ou gh wh o l es al e gr o ce rs t o r e t ail

st or es T h e wh o l es a l e gr oce rs c arry th e s e go o d s in
.

st o ck a n d fill s u ch o r d ers as th ey r ece iv e thr ou gh th e ir

s a l e sm e n fr om th e ir cu st o m ers O r d ers ar e s o li cit e d
.

fro m r e t a il ers e xt e nsive ly by th e C hi ck am au ga C o m

T h e C hi ck a m au ga C o m p any d o e s
’
p an y s s a l es m e n .

n o t m a int a in s a l es m e n in ea ch t e rrit o ry c o nst a ntly ,

b u t o nly as o cca si o n w a rr a nts O r d ers th a t a r e r e ce iv e d

.

by th e C hi ck am au ga C o m p a ny thr ou gh its o w n s a l es
m en a r e fill e d e ith er by d r op shi p m e nts fr o m t h e c o m
’ ’
p an y s o w n p l a nt o r fr o m wh o l es a l ers st o cks . In
e v e ry inst a n ce t h e goo d s a r e bill e d thr ou gh t h e wh o l e

s a l er Sp ecifi e d by th e r e t a il e r a t th e ti m e t h e o r d e r is
giv en . T h e wh o l e sa l e r r ece iv es his n o r m a l gro ss p r o fit
o n s u ch o r d ers .

O n wh a t gr o u n d s is th e s a l e s p o li cy o f th e C hick a
m au ga C o m p any to b e j u stifi e d ?
94 MARK E TIN G PR O BLE M S
67 . C O M M U N I T Y ST O R E s —
C O O P E R A T I VE A SS O C I A T I O N
OF WH O LE S A L E R S
T h e C o m m u nity St o r e s p l a n was st art e d in Phil a
d e l p hi a in th e a u t u m n O f 1 9 1 7 This p l a n p r o vi d ed
.

f or th e co o p era ti o n o f 24 wh o l e s a l e gr o ce rs a n d
u nit gr oce ry st o r e s in m a rk e tin g a d v ertis e d go o d s .

O n e o bj ec t o f th e p l a n w as t o f a cilit a t e c o m p e titi o n
with th e ch a in st o r e s in Phil a d e lp hi a A sh o rt ti m e
.

p r e vi ou sly s e v e r a l c h a in st o r e c o m p a ni e s h a d b ee n
m e r ge d int o o n e c o m p a ny o p era tin g br a n ch es .

A cco r d ing t o th e C o mm u nity St o res p l a n th e Wh o l e

s a l e G r o cers Sa l e s C o m p a ny w as to b u y c o op e ra tive ly
f o r 24 wh o l e sa l e gr o ce rs in Phil a d e lp hi a Fo r e x a m p l e
.
,

this c o m p a ny m i ght p u r ch a se s e v era l carl o a d s o f o n e

bra n d o f cerea l ea ch wh o l es a l e r a gree ing t o t ak e a s
,

m u ch as h e b e li e v e d th a t h e c ou l d s e ll I t w a s a gr ee d
.

th a t for a p eri o d o f o n e o r tw o w eeks th er e w ou l d b e

h ea vy l o ca l a d v e rtisin g o f th e p a rti cu l a r br a n d th u s
p u r ch a s e d E a ch o f th e wh o l e s a l ers w ou l d u n d e r
.

t ak e thr ou gh his s a l esm e n to s e ll as m u ch o f this p ar

ticu lar a rti cl e as p o ssibl e I t w as st a t e d th a t th e
.

s a ving O bt a in e d thr ou gh th e p u r ch a s e o f th e l ar ge
qu a ntity w ou l d u s u a lly b e p a ss ed o n t o th e r e t a il tr a d e
by th e c o m p e titi o n O f th e wh o le s a le rs .

T h e r et a il st o r e s whi ch w e re a ss o c i a t e d in this p l a n
w e r e kn o wn as C o m m u nity St o re s E a ch r e t a ile r p ar
.

t icip at in g w as t o d is p l a y o v e r his d o o r a S i gn b e a rin g

th e w o r d s C o m m u nity St o r e H e a ls o w a s t o p ay
.

d u e s int o a n a d v e rtisin g fu n d T h e l o ca l a d v ertisin g

.

w as t o b e carri e d o n u n d e r t h e n am e o f th e C o m m u nity
St or e s .

A wh o l es a l er wh o t o o k p art in this p l a n wa s n o t
c o m p e ll e d t o d o a ll his b u yi n g thr o u gh t h e Wh o l e s a l e

G r o cers Sa l e s C o m p a ny N o m ini m u m q u a ntity O f

.

p u r c h a se s w as S p e c ifi e d.I t w as l e ft e ntir e ly t o t h e

j u d gm e nt o f each in d ivi du al W h o l e s a l e r a s t o th e q u a n
tity th a t h e sh o u l d o r d er for e a ch s hi p m e nt .

Un d e r thi s p l a n it w as st a t e d th a t o n o n e o ccasi o n
B abbitt s s o ap w a s s o l d f or fiv e ce nts inst ea d o f s e v e n
’

ce nts Lu x f o r t e n ce nts inst e a d o f tw e lv e ce nts C a m p

, ,
 WH O L E SAL E TRA D E 95

b ell s so u p s t hr e e fo r tw e nty fiv e cents inst ead o f

’
-

twe lve cents each G u l d en s m u st a r d fo r tw e lv e c ents

,
’

inst e ad o f fif t ee n ce nts .

I n th e o p era ti o n o f th e p l a n ea ch m an u fact u r e r
wh os e p r o d u ct was pu r ch as ed co ntrib u t ed to th e a d v er
t is in g o f his p r o d u ct e ith e r d ir ectly o r in a dd iti o n a l
d is co u nts .

Wh at ar e th e m erits o f this p l a n fr o m th e st a n d
p o int O f a wh o l es a l e gr o ce r with a w e ll e st a blish e d
-

b u sin ess a n d s al es o f a y ea r ?

Wh at a r e th e m erits o f th e p l a n fr om th e st a n d
p o int o f a m a n u f act u r e r o f b a kin g p o w d e r wh o h a d
n o t h er et o f o r e s o l d his p r o d u ct in Phil a d e l p hi a ?

Wo u l d th e s a m e m erits O bt a in f o r a m a nu fa ct u r e r
o f a b a kin g p o w d er wh o a lr ead y h a d a w e ll est ab lish ed -

d em an d f or his pr od u ct thr o u gh u nit st o r es in

‘
Phila d elphi a ?

68 . C R E S C E N T G R O CE R Y C O M P A N Y —
R E TAI L
’
M E R C H AN T S B U Y I N G A S S O C I A T I O N
T h e C r es cent G r o cery C o m p a ny , a b u yin g a ss o ci a
ti o n o f r e t ail gro cers , was e st ablish ed in 19 1 2 I n 1 9 1 7 .

th e co m p a ny h a d m em b ers with w ar eh o u s es in
N ew a rk B o st on P ittsb u rgh Sa v a nn a h a n d N ew
, , , ,

Y o rk I t w as st at ed th a t t h e c o m p a ny int e n d ed t o
.

o p e n w a r eh ou s e s in th e n e a r f u t u r e a t s ev e n o r e i ht
g
a d d iti o n a l p o ints .

A cco r d in g t o th e ch art er th e co m p any m u st a lways

b e o wn e d a n d co ntr o ll e d by r e t a il gr o cers .

T h e C r es ce nt G r o ce ry C o m p a ny h a n d l es a b ou t
st ap l e arti cl es Th ey a ls o h a v e a lin e o f 1 50
.

1 Se e N ew Yo r k Jou r n a l o Co mme rce M ar ch 27 1 920

f , ; pp 10 1 1 ;
, .
-

al s o M odern M er cha n t a nd Gr o ce r y Wo r ld M a y 1 0 1 9 20 p 9
, , ,
. .
96 MARK E TIN G PR OB L E M S
it em s u n d er th eir o w n bra n d whi ch yi el d a l a r ge r ,

p r o fit . Th e s e g o o d s b e a rin g th e ir s p e c i a l br a n d a r e

o f hi gh q u a lity T h e m a n a gers o f t h e c o m p a ny st at e
.

“ ”
th a t th e y d o n o t int e n d to p u t o u t ch ea p m e r ch a n
d is e. I t is p l a nn e d th a t e v e nt u a lly th e com p a ny sh a ll
e n ga ge in m a n u f a ct u rin g .

A m e m b er o f this b u yin g a ss o ci a ti o n is n o t co m
p e lle d t o c a rry t h e C r e s c e nt br a n d in st o c k Wh e n a .

m e m b er d o e s p u t in th e C r e s ce nt br a n d o f go o d s it i s ,

with th e u n d erst a n d in g th a t th e m ini m u m p ri ce st at e d

in t h e p ri ce list is t o b e o bs e rv e d H en ce th er e is to .

b e n o p ri ce cu ttin g o n this bra n d .

A m em b e r is a ll o w e d cre d it u p t o 50% o f th e a m ou nt
o f m o n e y h e h as inv e st e d in his s u bs cri p ti o n t o t h e

cap it a l st o c k o f th e c o m p a ny I f a gr o cer h a s p a i d
.

$ 200 f or t en sh ar e s o f st o ck h e ca n o rd e r $ 1 00 w o rth ,

o f m er ch a n d is e with ou t s e n d in g a ch e c k with his o r d e r .

He p a ys within t en d ays fr o m d a t e o f inv o i ce I f he .

o r d ers a n am ou nt e x c e e d in g 50% o f his inv e st m e nt in

t h e st o ck o f th e a ss o ci a ti o n h e m u st s e n d a ch e ck f o r
,

t h e b a l a n ce o f his o r d e r T h e m e m b ers p ay fr e i ght

.

o n th e ir p u r ch as e s e x cep t o n d r o p shi p m e nts

,
.

A p ri ce list is issu e d e v ery sixty d ays su pp l e ,

m en t e d by ch a n ge sh e e ts a n d b u ll etins a t fr e q u e nt
int erv als M em b e rs s en d in o r d ers by m a il fr om th es e
.

p ri ce lists .

A m em b e r o r d ina rily s u bs crib es to t en sh ar es o f

st o ck a t $ 20 a sh a re He can b u y f e w e r sh a r es b u t
.
,

th e n h e r e ce iv e s l e ss c r e d it T h e first st o ck w as t a k e n
.

o u t a t $ 1 5 a sh ar e th e n wh e n a l a r ge r lin e o f go o d s
,

w as o ff e r e d a t , a sh a r e a n d l a t e r a t $ 20 a sh a r e
,
.

I t is e x p e ct e d th a t this p ri ce will b e in cr ea s ed M a ny .

o f th e e a rly m em b e rs h a v e t a k e n o u t a d d iti o n a l sh ar e s

a t $ 20 e a c h a s a n inv e st m e nt
,
V o tin g ri ghts a r e o n e
.

v o t e f or e a ch sh ar e o f st o ck h e l d T h e st o ck is n e go .

ti a bl e a n d tra nsfe r abl e T h e c o m p a ny ca nn o t b u y

.

b a ck its o w n st o ck I t is fo r m u l atin g a p l a n t o e st a b
.

lish a fu n d t o b u y u p a ll fl o a tin g st o ck a n d r e d istrib u t e

it a m o n g m em b e rs T h e d ivi d e n d s h a v e b e e n 8 t o 1 0%
.

o n th e st o ck .

Wh e r e in ca n s u ch a n o rgani z ati o n b e o p er at e d m o r e
 WH O L E SAL E TRA D E 97

n om i cally th an a r egu l ar wh o l es al e gr ocery b u sin ess ?

eco

Wh a t ar e th e w eakn ess es o f th e p l an ?

69 . C O O P E R AT I V
E G R O CE R Y S OR E S
T -
R E T AI L
M E R C HAN T S BU Y I N G A S S O C I A T I O N
’

T h e fo ll o win g an n o un cem ent was p u blish e d in a

trade pap er M ar ch 13 , 19 1 9 :

A ccord ing t o a re port from N orfolk Va pl ans ar e b e in g , ,

lai d whereby 4 00 r et ail gro cery s t ores o f tha t city ar e t o

co m b in e i n t o o n e ch ai n t o b e known a s t h e C o o p er a tiv e
G r ocery St or e s T he st or e s will co n tin u e t o b e i n di vi d u a lly
.

owne d b u t e a ch o n e will b e k n own a s a m em b e r o f t h e

,

ch ain . M em b er shi p is con fi n e d t o t h e m em b er s o f t h e

Ret ail Gro cer s As s o ci ati on P u r chas e s will b e m ad e o n a
’
.

c as h b as is an d e a ch r et ail e r will h a u l hi s o wn go o d s A .

B uyi n g C o m m itt ee h as b een nam e d a n d plan s l ai d fo r i mm e

d i at e a cti o n in or ga n izi n g t he m e m b er s o f t h e a ss o ci ati o n
in on e co o per ative chain o f s t or e s It i s b eli eved that .

a ll t h e 4 00 m em b er s o f t h e a ss o ci ati o n will c om e in t o t he

p l a n . T h e p l an in b ri e f p r o v i d e s t h at a C en t r a l C o m
m itt ee wi ll m a k e a ll p u r ch a s e s f o r a ll t h e co o p e r ative s t o re s ,

b u yi n g at t he clo s es t ca s h fi gu re s e a ch m em be r t o h a u l ,

his o wn go o d s On e l arge a dve r ti s em en t will a nn o u n ce

.

t he r et ai l pri ce with s e l e c ted l e ad er s wh i ch p r o b a b ly will

,

b e s ol d at co s t As f a r as po ss ib l e t h e c as h a n d carry pl an
.
,

will b e a d o pt e d E very arti cl e in t h e co o perative s t o re s is

.

to b e m ar k ed with a pri ce t ag tha t a ll c u s to m er s m a y k n o w

,

j u s t wh at they ar e b uyi n g a n d t he pri ce All s t o re s in t he .

ch a i n will b e k n own as C o o p e r ativ e G r o ce ry St o r e s a n d will

b ear i d en ti cal p lat e s i gn s E a ch m em b er wil l co n tri b u t e h is
.

p r o ra ta s h are o f t h e a dverti s i n g e x p en ses T hirty m em b er s .

j o i n i n g l as t week a r e s ai d t o h ave p ai d o ver t h e f u ll a m o u n t

n e ce ss a ry t o cov e r e x p en s e s f or t h e fir s t m o nth A dd iti o n a l .

m em b er s will r e d u ce t h e e x p ens e t o ind ivi d u a l m em b er s .

Wh a t p o li cy sh o u l d b e a d op t e d by R i ch a r d H am p
t o n a wh o l es a l e gr o ce r in N o rfo lk with a nn u a l s al e s
,

of a y e a r t o m e e t this sit u a ti o n ?
,
98 MARK E TIN G PR O BLE M S
Wh at p o li cy sh o u l d a m a n u fact u rer o f a n ati o n ally
a d v e rtis e d f o o d p r o d u ct wh o h as b ee n s e llin g thr ou gh

t h e wh o l es a l e gr o ce ry tra d e a d op t t o w a r d this n ew
o r ga niz a ti o n ? T h e m a n u fa ct u r e r h as n o t em p l o y e d
a n y s p eci a lty s a l e s m e n t o call u p o n r e t ail ers .

70 . P R O CT E R GAM B LE —
D I R E CT SE LL I N G
Until a few yea rs ago Pr o ct er G a m bl e C o m p a ny
d istrib u t e d th eir p r o du c ts e ntir e ly thr ou gh wh o l es a l ers .

Th e ir p ro d u cts ar e I vo ry So a p St ar Soap L en o x Soap

, , ,

an d C ris co T h e first m o d ifi ca ti o n o f this p o li cy wa s

.

th e est a blish m e nt o f th e ir o wn wh o l es a l e bra n ch in

N ew Y o rk to s e ll d ir e ctly t o r e t a il ers in th e m e tr o p o l
it a n d istri c t I n 1 9 1 9 it was st a t ed th a t the com p any
.
,

h a d o rga niz e d to s e ll d ir ect to r et a ile rs in s om e o th e r

d istri c ts Wh a t p r ob a bly w ere th e m o tiv e s o f th e
.

co m p a ny in m a kin g this ch a n ge in its p o li cy ?

71 . C A VA LI E R B I S C UI T C O M P AN Y —
WH O LE SA LE
D I ST R I B UT I ON
T h e C a va li er B is cu it C om pa ny o f Atla nt a G eo r gi a
, , ,

m an u fa ct u r e s cra ck e rs of v a ri ou s kin d s Th es e .

go o d s h a v e b ee n s o l d in b u lk t o wh o l e s a l e rs T h e .

co m p a ny h a s tri ed e xp e ri m e nts in th e s a l e o f br a n d e d

go o d s Th es e exp eri m ents h av e b een su ccessfu l

. .
 WH O L E SAL E T RA D E 99

T he co m p a ny is p rosp ero u s a n d it d es ir es n o w t o
,

increa s e s u bst a ntia lly th e v o l u m e o f its b u sin e ss I t .

p l a ns t o br i n g a b ou t this d e v e l o p m e nt gr a d u a lly with ,

w e ll-co rr ela t ed s a l es a n d a d v ertisin g e ff o rts I n o r d e r .

to lay th e f o u n d a ti o n f or a l a r ge e x p a nsi o n in th e f u t u r e ,

sh o u l d th e compan y ch an ge its p o li cy an d s ell dir ectly

to r e t a il e rs ?

72 . M AR P LE C O M P AN Y —
WH O LE S A LE B R AN C H E S
T he M arp l e C om pan y l o ca t e d in N ew E n gl a n d
, ,

m an u fa ct ur es ca rp e nt ers t o o ls a n d sim i l a r p r o du cts

’
.

I ts lin e rep r es ents ab ou t 1 500 it em s in cl u d in g t o o ls ,

su ch a s b ack s aws s cr ew dr ivers ca lipers a n d dr ill s

, , , .

Fo r m a ny o f th es e t oo ls s ev era l m o d e ls are m an u
,

fa ctur e d T h e d iff er en ce b e twee n m o d els fr e qu ently

.

li es in th e w e i ght o f th e h an d l e th e m at eri a l of t h e
,

ha n d l e o r s o m e o th er sli ght v ari a ti o n Thi s v arie ty

,
.

has b een d e vel o p e d in o r d er t o ca t er t o th e pr efer e n

ces o f th e a rtisa ns wh o u s e th e t o o ls .

T h e co m pa ny h as f ou n d th a t n o wh o l esa l er will
car ry a c o m p l e t e lin e o f its p r o d u c ts T h e m ark e t .

for th es e t o ols am o n g artis ans d o es n o t app ear s u s cep

tible o f rap i d e xp a nsi o n T h e co m pa ny is co n tem p la t
.

in g th e est a blish m e nt o f wh o l es a l e bra n ch o ffi ce s

thr ou gh whi ch t o s ell its p ro d u cts d ir ectly t o r et ail ers .

Wh a t m e th o d can be a d o p t ed t o a ssist in m akin g

s u ch a ch an ge in p o li cy s u ccessfu l ?
1 00 MARK E TIN G PR OBLE M S
73 . M I K AD O C O M P A N Y —
D I ST R I B UT I N G B R A N C H E S
In 1 9 16 it nn ou n ced th a t th e Fo rd M o t o r
wa s a

C o m p a ny h a d o p en ed th irty f o u r n ew b ran ch es l -
.

This m ad e a t o t a l o f e i ghty f ou r bra n ch e s -

Fr o m .

th es e bra n ch e s p ra cti ca lly a ll shi p m e nts w er e m ad e to

l o cal d ea l ers Pr e vi ou sly th e d istrib u t o rs in th e c iti es
.

wh ere th e s e bra n ch e s w e r e l o ca t e d h ad s o l d a t r et a il
a n d a ls o h a d s o l d to d ea l e rs in th e ir r e sp ectiv e t e rri

t o ri es . A f ew o th e r au t o m obil e c om pani es h ave a

s m a ll n u m b er o f bra n ch h ou s es .

Se v era l r ea s o ns h av e b ee n give n for th e est ablish

ment o f bra n ch h ou s e s by au t om obil e m an u f act ur ers .

I t is st at e d th a t it is d iffi cu lt to s ecu r e d esir a bl e d is

tr ib u t or s with th e n ecess ary cap it a l a n d s a l e s a bili ty .

T h e d istrib u t o r m u st b e a bl e t o a ssu m e a l a r ge p o rt i o n
o f t h e c r e d it b ur d e n inv o lv ed in th e s a l e o f au t o m o bil es .

He e m p l o ys n u m er ou s s a l e sm e n a n d s e l e cts a n d s u p e r
vis e s th e w o rk o f d eal ers in hi s t e rrit o ry I n th e l ar ge .

citi es f ur th erm o re it is i m p o rt a nt th a t t h e d istrib u t o r

, ,

sh ou l d d isp l a y th e cars e ff e ctiv e ly b ecau se o f th e l arge ,

n u m b er o f o u t o f t o wn V isit ors t o th e d istrib u tin g

- -

a ge n cy wh o m ay b e n o t i m m ed i at e b u t p r o sp ectiv e
,

p u r ch a s e rs fr o m l o c a l d ea l e rs D istrib
. u t o rs w h o f u l fill

th es e q u alifi ca ti o ns are n o t easily o bt a in e d .

T h e M ik a d o C om p any m a n u fa ct u rin g m edi u m

,

p ri ce a u t o m o bil e s in l a r g e v o l u m e with di strib u,t o rs

l o cat ed in ab ou t f o rty o f th e l ar ge citi e s in th e Uni t ed
St a t es is co nsi d erin g its f u t u r e p o li cy t o w ar d th e
,

e st ablish m e nt o f s a l e s br a n ch es Wh a t w ou l d t h e
.

M ik a d o C o m p any ga in by op erating its o wn wh o l es al e

br an ch es ? Wh at w ou l d it l o s e ?
P ri n te rs I
’
1 n k, Augus t 1 7, 1 9 1 6, p 8 4. .
 WH O L E SAL E TRA D E 1 01

74 . W H O L E SA L E D I STR I B U T I O N OF M E AT S
T h e m e th o d s of m a rk e tin g
fr esh m e at h a v e l o n g
b ee n s u bj e c t t o co ntr o v e rsy Th e y a r e th e r e f o re o f .

l a rge pu b li c int ere st as w e ll as il l u stra tive o f im p o rt ant

m a rk e tin g m e th o d s .

Th ere a r e fi ve l a rge m ea t p a c kin g c om p a ni es in th e

Uni t ed St at es Th e s e a r e Swi ft . C o m p a ny Ar m o u r ,

C o m p a ny M o rr is , C o m p a ny Wils o n C o m p an y , ,

an d t h e C u d a hy P a cki n g C o m a ny A lth o u gh a tt a cks

p .

h a v e v e ry o ft e n b ee n m a d e a ga inst th es e l ar ge p ac k e rs
“ ”
a s co nstit u tin g a tru st th e r e is n o int erl o ckin g
,

o w n e rshi p T h e co m p an i e s th e m s e lv e s st at e th a t e a ch
.

o n e is o p e r a t e d a lt o ge th e r in d ep e n d e ntly o f th e o th e rs

an d th a t r e a l c o m p e titi o n e xists .

A cco r d in g t o t h e Fe d era l Tr a d e C o mm issi o n r ep o rt

issu e d in 1 9 1 8 1 th es e fiv e b ig p a ck ers kill e d 70 % O f
,

th e liv e st o ck sl au ght er e d by all p a ck e rs a n d b u t ch e rs

e n gage d in int erst a t e c o m m e r ce Fo r th e diff e r e nt .

c l as s e s O f liv e st o ck t h e p e r ce nt a ge s w er e st a t e d t o b e

as f o ll o ws : ca ttl e ca lv e s h o gs
sh e ep an d l am bs I t w as fu rth e r st at e d by t h e
Fed e ra l Tr a d e C o m m issi o n th a t th e r e w as o nly o n e
in d ep en d en t p ack er n a m e ly th e Kin ga n C om pa ny
, ,

wh o e ach sl a u ght e r e d as m u ch as 1 % o f th e t o t a l int e r

st a t e ship m e nts o i ca ttl e an d o nly nin e in d ep e n d ent ,

p ack ers wh o sl au ght e r e d as m u ch as 1 % o f th e t o t a l

i nt erst a t e ship m e nts o f h o gs T h e b ig p a ck ers as s ert ed .

th a t th ey did n o t h a n d l e o v e r o n e thir d o f th e t o t a l -

m ea t p r o d u cti o n o f th e Unit e d St a t e s ? T h e r e m a in d e r
" t

w as in th e h a n d s o f th e s m a ll er p ack e rs an d l o ca l
b u t ch e rs .

Th e Fe d er a l Tr ad e C o m m issi o n st a t e d fur th e rm o re
th a t Swift C o m p any w a s t h e gr ea t e st b u tt e r d is
trib u t o r in th e Unit e d St at es h a n d lin g in 1 9 1 6 ab o u t ,

1S u mma r y of the R epo rt of the Fede ral T rade C o m m is si on o n the

M ea t P acki n g I nd us try, Ju ly 3 , 1 9 1 8 O t h er r e fe r e n c e s o n t he m e a t
.

pa cki n g i n d u str y : R e po rt of the Co m m is s w n cr of C or po ra ti o ns o n th e

u o
Beef I nd s try, 1 9 05 ; R e p rt of the Fede ra l T ra de C m m i ss i o n o n th e o
u
[Hea t P acki n g I n d s try, P a rt 1 1 , E vide n ce of C m bi n a ti n a m n g P a cke r s o o o .

Swi ft C o , A na lys is of P a rt I I of the Fed er a l T ra de C m m i s si on o

R epo rt Ar m
. r ou
C o , I s the Re ta i ler Getti n g a S q a r e Deal f r m
. u o
u
A rm o r ? A r m r ou
C o , Yea r B k , 1 9 1 9 , 1 9 20 Swift
. oo C o , Yea r . .

oo
B k , 1 9 1 9 , 1 920 .
1 02 MARK E TIN G PR OBLE M S
nd s This wa s s a i d to b e n early as
po u .

m u ch as th e co m bin ed s a l e s o f th e tw o l ar ge st n o n
p a ckin g o r ganiz a ti o ns T h e fiv e b ig p a ck ers it was
.
,

fu rth e r st a t ed h a n d l ed a t l ea st o n e h alf o f th e int er

,
-

st a t e co mm er ce in p o u ltry eggs a n d ch ee s e ‘
I n 1 9 16
, ,
.
,

th ey w ere s a i d t o h av e r efin e d o f th e co tt o n

s eed O il o u t pu t o f th e Unit e d St a t es I t was a ls o .

st a t ed by th e Fed era l Trad e C omm issi o n th a t Arm o u r

C o m p a ny in cr ea s ed th e ir ca nn e d goo d s b u sin ess
fr o m a b o u t in 1 9 1 6 t o a b ou t in
1 9 1 7 wh e r e a s th e co m bin e d s a l e s o f th e s e p r o d u cts by
,

A u stin N i ch o ls ,
C o m p a ny a n d Sp ra gu e W arn e r ,

C o m p a ny t wo o f th e l ar ge st in d ep e n d e nt wh o l e s a l e
,

gro ce rs in the cou ntry am o u nt e d t o o nly ,

in 1 9 1 7 .

I n th e p l a nts o f th e b ig p ack e rs a ll th e b y p r od u cts -

a n d w a st e a r e u tiliz e d T h e u tiliz a ti o n o f b y p r o d u cts

z -
.

led th e p a ck ers to e n ga ge in th e m a nu fa ct ur e o f a gr ea t
v ari ety o f n o n e d ibl e p r od u cts s u ch a s glu e fe rtiliz er
-
, , ,

p h a rm aceu ti ca l p r o d u cts knife ha n d l es p i p e st em s , , ,

c r o ch e t n eed les b u tt o ns wash ers bru sh e s t e n nis

, , , ,

strin gs cl o ck c o rd s d ru m sn ar e s an d a l o n g lis t of
, , ,

o th e r a rti cl es .

A p r e vi ou s go ve rnm ent r ep o rt st at ed th a t th e
valu e o f the b eef fro m a typ i ca l st ee r is o nly a b ou t
thr ee four ths o f th e t o t a l v a lu e o f th e p ro du cts o bt a in e d
-

fr om the a ni m a l T h e n e t a m o u nt r ea liz e d fr om th e
.

s al e o f th e by p r od u c ts is s e v e ra l t im e s gr ea t er th a n
-

th e t o t a l p ro fit o f th e b ee f its e lf I n fact th e a m ou nt ,

re ce ived by the big p a cke rs fro m the s a le o f b e ef h as

n o t o r d ina rily co v er e d t h e a m o u nt p a i d f o r th e b eef

ca ttl e .

T h e p l a nts o p e ra t e d by th e b ig p ack e rs ar e l o ca t e d
chi e fly a t C hi ca go K a ns a s C ity St Lo u is Om ah a
, ,
.
, ,

Swi ft
1 C o i n t heir year boo k for 19 20 st at e t h a t t he fi v e b ig
.

p ack ers d o no t h a n d le m o r e t h a n 1 5 t o 20 % o f t he o ultr y , e ggs an d

b u tt er t h a t e n t er i n t o tr ad e c h a n n els i n t h e Uni t ed t at es g .

2 An i n t e rest i n
g st at e m e n t o n t he us e o f b y rod u cts is giv e n b y
E d w ar d M o tt Woo lle y, H o w Ar m ou r E x plor N e w M ar k e ts a n d
“

De v e lo pe d By P r o d uc ts ,
- P ri n ters I n k , M arc h 1 , 1 9 1 7 , p p 3— 6 ,
’
.

1 04 - 1 1 7 .

Repor t of the C om mi s si on er f Cor porati ons us try

i
o on the B eef I nd ,

p . 2 l
 WH O L E SAL E TRAD E 1 03

St . J o s ep h Fo rt Wo rth Si o u x C ity an d St P au l
, , ,
. .

Th es e a r e fa v o ra bl e p o ints for r e ce ivin g Shi p m e nts o f

liv e st o ck a n d c o nstit u t e t h e l a r ge liv e st o ck m a rk e ts -

o f t h e c o u ntry B y sl a u ght e rin g t h e li v e st o ck a t th ese

.

p o i n ts in th e M i ddl e W e st a s a vin g in tr a nsp o rt a ti o n

,

is e ff ect ed Ab o u t 55% o f t h e live w e i ght o f a st ee r is

.

m a rk e t e d a s b e e f T h e r e m a in d er is w a st e o r b y
.

p r o d u ct Th e r e is a ls o s o m e shrink a ge in w ei ght a n d
.

d e t e ri o r a ti o n in q u a lity o f liv e st o ck wh e n shi p p ed

l o n g d ist a n ce s Fu rth e rm o r e in th e c a s e o f b e e f a
.
, ,

p e ri o d o f ri p e nin g is d e sir ab le B ee f is co nsid e red

.

b e tt e r by c o nsu m e rs ten d ays a ft e r killin g th a n a t th e

ti m e o f sl au ght e r C o ns e q u e ntly th e d ist an ce fro m
.
,

th e m ark e t is n o t a d isa d v a nt age in l o ca tin g a b e e f

sl au ght erin g p l a nt .

T h e l a r ge st m a rk e ts for th e fr e sh m ea t p r o d u ce d
by th e b ig p ack e rs is in th e E ast e rn p a rt o f th e Unit e d
St a t es .Th e y f u rnish a hi gh p e r ce nt a ge o f t h e t o t a l
q u a lity o f fr esh b ee f co ns u m ed in N e w E n gl a n d a n d
in th e N o rth Atl a nti c d istri ct ge ne ra lly I n th e M i d d l e .

We st a n d in th e So u th the ir p r op o rti o n o f th e t o t a l
,

b u sin ess is s u bst a nti a lly s m a lle r b ecau s e o f t he com ,

p e titi o n o f l o ca l b u t ch e rs .

T o s u pp ly th es e E a st ern m a rk e ts fr esh m ea t is ,

shi pp ed in r e fri gera t o r ca rs o wn e d by e a ch o f th e l arge

p a ck ers t o its o wn wh o l e s a l e bra n ch e s whi ch ar e f u lly
e q u i pp e d for r e fri ge r a ti o n Fr o m th es e br a n ch e s
.

r ep o rts o n s a l e s st o cks a n d c o ll e cti o ns ar e s e nt t o th e

, ,

h o m e o ffi ce a t fr e q u ent int e rva ls .

Fr o m th e s e b r a n ch h o u s es th e m e a t is d istrib u t e d
'

to r e t a il gr o ce rs a n d m ea t d ea l e rs Ab o u t t w o w eeks ’
.

ti m e e l ap s es fro m th e p u r ch a s e o f th e ca ttl e u ntil th e

m ea t is s o l d a n d p a i d fo r by th e r e t a il e r T h e l a r ge .

m ea t p a ck e r th e r e fo re h as a st o ck t u rn in his fr e sh
, ,
-

m e a t b u sin e ss o f a t l ea st twe nty fo u r ti m es a y ea r -

.

O n e go v e rn m e nt r ep o rt st a t e d th a t t h e c o st o f
o p e r a tin g a br a n ch h o u s e by t h e p a ck e rs w as a b o u t t h e

s a m e a s th e t o t a l o p e r a tin g e x p e ns e o f a n in d epe n d e nt
co m m issi o n m e r ch a nt o r wh o l e sa l e m e a t d e a l e r ‘ .

1 Re o rt o th e Co m m i s si o ner o Co r or a ti o s o the B ef I nd us try

p f f p n n e ,
26 3 .
1 04 MARKE TIN G PR OBL E M S
T h e Fe d e r a l Tra d e C o m m issi o n in 1 9 1 8 s u m m ariz e d
th e d istrib u ti o n syst em o f th e m ea t p a ck ers as fo ll ows :
T h e p a ck er s d i s trib u ti o n O f t h e ir pr o d u ct s i s e ff e ct ed
’

thro u gh a sys t em O f b r a n ch h o u s e s lo cat e d i n t h e l a r ge

“ ”
t owns a n d citi e s a n d a syst e m o f r e fri ger a to r p ed d l er c ar
,

ro u t e s whi ch r e a ch t h e s m al ler co m m u niti e s S wi ft .

C o m p an y r e a ch a l a r ger n u m b er o f citi e s a n d t o wn s by
p ed d l er c a r t h an a ll o t h er p ack er s w h i le Ar m o u r
, C om
p any h a v e d e v e l o p e d a s y s t e m o f d eliv eri n g f r o m t h ei r
b ra n ch h o u s e s b y tr u cks r e a ch i n g b y t hi s m e a n s o v er
,

t o wns a n d m ak i n g t h eir t o t a l num be r o f t o wns

gr e at e r t h a n S wi ft C o m p an y .

Thi s s ys t em wh o le s ale d i s t rib u ti o n t hr o u gh br an ch

of
ho u s e s a n d p ed d l er car s i s t h e b u lwark o f m on op oly Th er e .

i s Vir t u ally n o lim it t o t h e p o ss ib l e e x p ans i o n o f t h eir wh o le

s ale m er chan d i s in g s h ort o f t h e co m p l et e m on o po liz ati o n o f
t h e prim ar y d i s t rib u ti o n O f t h e N at i on s f o o d
’
.

As r es u lt o f its inve sti gati o ns th e Fe d e ra l Tr a d e

a

C o mm i ssi o n r ecomm e n d e d am o n g o th er thin gs :

,

Th at t h e G o vern m en t a cq u ir e all privat ely o wned r efrig

cr at o r c ar s a n d a ll n ec ess ary e q ui p m en t f or t h e ir p r o p er
o p er ati o n a n d th at s u ch o wn er s h i p b e d e cl ar e d a G o vernm en t
m on o p oly .

Th at t h e Fe d er al G overn m ent a cqu ir e s u ch o f t h e b r a n ch

h ou s e s c o l d st o r a ge p l a nts a n d war eh o u s e s as ar e n e ces s ar y
,
-
,

t o p r o vi d e f a cili t i e s f o r t h e c o m p et itiv e m ar k et i n g an d
st ora ge o f f o o d pro d u ct s in t h e pr i n ci pal cen t er s o f d is t r ib u
ti o n a n d c o ns um pti on T h e s am e t o b e o p er at ed by t h e
.

G ov er n m e n t a s p u b li c m ark et s a n d s t o r a ge pl a ce s u n d er
s u ch co n di t i o ns as wi ll aff ord a n o u t l et f o r a ll m an uf a ct ur er s
a n d h an d ler s O f f o o d p r o d u cts o n e q u al t er m s . S u pp l e
m e n tin g t h e m ar k et in g a n d s t or age f a ci li t i es t h u s a cqui r ed ,

t h e Fe d er a l G o v er n m en t e s t ab li s h a t t h e t er m ina ls o f a ll
,

p r i n ci p al p o i n t s o f d i s t r ib u t i o n a n d con s um pt i o n c entr al
,

wh ole s al e m a r k et s an d s t o r a ge p la n t s wi th f acili ti e s o pen

,

to a ll u p o n p aym e nt o f j u s t a n d f air c h arge s .

 WH O L E SAL E TRAD E 1 05

( 1 ) Ho w w o u ld th e a d op ti o n o f th e se r eco m m en d a
ti on s o f th e Fe d era l Tra d e C o mm i ssi o n a ff e ct t h e p ri ce
o f m ea t ?

( 2) I n De cem b er 1 9 1 9 it w as st a t ed th a t the T e xas

, ,

U ni o n P a ckin g C o m p any w as t o b u il d a pa ckin g p l ant

a t H o u sto n t o p a c k a ll ki n d s o f li v e st o ck p r o d u c ts a n d

to o p era t e a c anni n g d ep a rt m e nt fo r m ea ts v ege t a bl e , s

a n d fru its . I t was st a t ed th a t t h e p l a nt w o u l d o p er at e
its o wn r e fri ge r at o r c a rs f o r r ea c hi n g inl a n d p o ints a n d
, ,

th at it w ou l d u s e r e fri ger at o r st e am shi p s f or ex p o rtin g

t o fo r e i gn m a rk e ts .

How w o u l d th e a do p ti o n o f th e Fe dera l Tra d e

C ommi ssi o n s r eco mm e n da ti ons aff ect th e m ark e t in g
’

p r o bl em s o f this c om p any ?
(3 ) Ho w w ou l d th e ad o p ti o n o f th es e r e co mm e n d a
ti on s aff ect th e a b ility o f a s m a ll in d ep en d ent p a cke r
in Wis co ns in to co m p e t e wi th th e l ar ge pa ck e rs ?

75 . J O HN P SQUI R E
. C O M P AN Y
I n C am brid ge M ass ach us e tts is l o ca t ed th e p ack
, ,

in g p l a nt o f J o hn P Sq u ir e
. C o m p a ny whi ch h as a,

ca p ac ity o f h o gs a d ay T h e h o gs th a t a r e
.

sl au ght e r e d at this p l ant ar e p ra cti ca lly a ll shipp ed

fr om th e M i dd l e W est M a ny o f th em ar e I o w a h ogs
.

b o u ght a t M ississi pp i R iv e r p o ints Th e y a r e s hi pp ed

.

E ast in tr a in l o a d s a cco r d in g t o r egu l ar s ch ed u l es .

Wh a t fa ct o rs e na bl e this p l a nt t o c om p et e with th e
West ern p la nts o f th e b ig p ack ers ?
106 MARK E TIN G PRO B LE M S
76 . SE GR E G A T I O N OF GR O CE R Y B U SI N E S S or

PA CK I N G C O M PAN I E S
AS a r es u lt o f la w s u its br ou ght a ga inst th e big
-

p ack e rs by t h e Fe d era l go ve rn m ent th es e p ack ers in ,

D ecem b er 1 9 1 9 a gree d with t h e go v e rn m ent t o s e p a

, ,

ra t e co m p l e t e ly th e ir m eat b u sin e ss fr o m t h e m ark e tin g

o f ca nn ed fru its c a nn e d v eget a bl e s ca nn e d fish gra p e
, , ,

j u i ce c o n d i m ents a n d a few o th er p r o d u cts I n J u ly

, ,
.
,

1 9 1 9 Wils o n
,
C om p a ny h ad s o l d th e ir v eget abl e a n d
fish ca nning b u sin ess t o A u stin N i ch o ls C o m p a ny
, ,

wh o l esa l e gr ocers T he packi n g com p a nie s a ls o agr e ed

.

to s e ll th e ir int e r e st in sto ck y a r d s a n d th e ir r a i lr oa d s ,

in t erm in a ls m ark e t n ews p ap ers pu bli c co l d st ora ge

, ,

wa reh o u se s an d Si m il ar int e r e sts

, .

Up t o this ti m e s e v e ral o f th e b ig pack e rs h ad u s ed

the ir bra n ch h o u s es th eir p ed d l er ca rs an d th eir s a l es
, ,

fo r ce fo r d istrib u tin g n o t o nly fr esh m ea t b u t a ls o

ca nn e d go o d s a n d o th e r p ro d u cts so l d thr o u gh r e t a il

sto res T h e Fed er a l Tra d e C o m m issi o n criti cise d this

.

syst em as o n e t en d ing to m o n o p o ly T h e N a ti o n al .

Wh o les a le G ro cers Ass o ci a ti o n c l a i m ed th a t di s cri m

’

in atio n was b e in g sh o wn by t h e r a i lr o a d s in fa vo r o f
th e b ig p ack ers S in ce th e p ack ers we r e a ble to fill o r d e rs
,

for r et ail e rs m o re q u i ckly thr o u gh th e ir sp eci a l tr a ns

p or tatio n facili ti es th a n goo d s co u l d b e d e live r e d by
the wh o l e sa l e gr ocers with o r d in a ry fr e i ght shi p m ents 1

Wh a t p ro b ably will b e th e effe ct o f this s ep ar a ti o n

o f th e p a ck e rs b u sin ess o n p ri ce s an d o n co m p e titi o n
’

with wh o l es al e gro cers ?

1 The followin g dis patch was publis hed i n the N ew Yo rk Jou rna l
o Com me r ce , M ar ch 25, 1 920 : C h icag o , M ar ch 23, 1 920 Dis s at is fie d
“
f .

Wl t h t e r e ce n t G o v e r nm e n t d e cr ee , li m i t i n g t he b usi n es s a ct iv it ies of
h
t h e B1 g Fi ve pack ers , t he N at io n al Wh o les al e G r o cer s Ass ociat io n
‘ ’ ’
 WH O L E SAL E TRA D E 1 07

77 . I N T E R N AT I O N A L H A R V E S TE R C O M P A N Y
T h e Int erna ti onal Harv e st er C o m p any is th e l argest
p r o du cer o f farm im p l e m e nts in th e Unit e d St a t es It .

m a n u factur es a full lin e o f th e s e p r o du cts A cco r di n g .

to t h e r ep o rt o f th e C omm i ssi o n er o f C o r p o r a ti o ns
p u blis h d
e in 1 9 1 3 , th e c o m pa ny h ad a m u ch l a r ger
1

shar e in th e p ro du cti o n o f h eav y m achin ery th a n i n

th e l e ss expe nsiv e t o o ls an d i m p l em e nts I t is st at e d .

in th at r ep o rt th at in 1 9 09 th e I nt ern ati o na l H arv est er

C o m p a ny p r o d u ce d o f t h e bin d e rs a n d h e a d e rs

m a nu fact u r e d in th e Unit ed St a t es , o f th e

m o w e rs , o f t h e r ea p er s , o f t h e r a k es ,

o f t h e t e d d e rs , 50% o f t h e Sp r ea d ers , 4 3 % o f

th e d isk h a rr o ws , 1 5% o f the far m wago ns , an d s o o n

fo r o th e r it em s .

T h e I nt erna ti o n a l H arv e st e r C o m p an y a t th at tim e

m a int a in ed a b ou t 9 0 ge n era l age n ci es in th e U n it e d
Sta te s E a ch o f th e s e a gen c i e s was a wh o l esa l e d is
.

trib u tin g bra n c h with a n o fli ce a n d w a reh o u s e a n d

ann o u n ced t od ay t hat its cas e agai ns t t he pack ers a n d t he r ai lr o ad
wo ul d b e re o pe n e d b e fo r e t h e I n t e rst a t e C o m m er ce C o m miss io n .

T he h e a ri n g is t o be h eld i n C hi ca go b e i n i n g M ar ch 26
g
n .

Ar j a y Da w e s pr es ide n t o f t h e G r o cers Ass o ciat io n i n a co m

, ,

m u ni catio n t o t he m e m b e rs o f t h e b o dy d e clar e d t h a t t h e d e cr e e ,

o b t ai ne d b y Att o r ney G e n e r al P alm er agai n st t h e ack er s f ailed t o ‘

b e o f m u ch c o ns e q u e n ce t o t he w h o les al e gr o ce rs s o ar as t he r O pos i ,

tio ns ar e c o n cer n ed for whi ch we h av e bee n fi ght ing bef or e t e co m

m iss io n Am o n g t he r e as o ns giv e n for c o n t in ui n g t he h e ari n g wer e :
’
.

T he d e cre e d o es n ot a ffe c t c h eese b u tt er o le o m ar gar i n e a n d

“
, ,

o t her b u tte r s ubst it u t es lar d s ub stit u t es pou ltry o r e

, ,

T he d e cr ee r u s a gai ns t cer t ai n co r or a t io n d efe n

“
n n ts b u t d oes ,

n ot aff e c t
t he h a n d li n g o f t he s lle u nre la e d ar ic le
o -c a b y the ‘
t ’
t s
u
i n di vi d als n am e d i n t he d e cr e e O her co p r a i n alr e ad y ar e
. t r o to s
be i n g r a pidly or
ga ni z e d fo r t h e v e y p r po e o f h a n dli n g hos e
‘
r
un u s t
t c o m m o d it ies
’
re la e d .

o
T he d e c r e e f ails t a pply t o t he a rt icles list e d i n t he d e cr e e itse lf
‘

whe n h a n dl e d b o o o o
t he r c r p r at i n s a n d s hi pped i n t he s am e c ar wi t h
ou
fr es h m e ats a n pa cki n g h s e p r d cts , p r v id e d t he c ar is w n e d o u o o
or leas e d b y a r ai lr a d c m p a n y o ’
o .

‘
T he b as is o f ou o
r w h le c as e , t he c m m ni cati n s ays , is t hat
’ ‘
o u o
o
co m m di ties no t r e q ui r in g r e fri ge r at i n a n d e xpe dit e d ser vi ce s ho ld ou
n o t b e pe r m itt e d t o mi x wi t h p acki n g h use pr d c ts a n d fr es h m e ats-
o o u
ge tt i n g s pe cial e xpe dit e d s e r vi ce I f t he pack e rs a r e pe r m itt e d t
. o
c o n t i n ue t o ou
shi p r art icles wit h t heir fr es h m e ats a n d pac ki n g h s e -
ou
o u
pr d cts i n t he s am e car , i t will m e a n t h a t t h ey will h av e a n n j s t u u
a d v a n t age o v er e v e r y c m pet it r who d oes no t als
’
o o e n gage i n t h e o
packi ng b us m ess .

1 Bur eau o f Co r or at io ns
p , The I nte rna ti na l Harves te r Co ; o .

also C us H M cCo rmi ck .

“
Wh a t 7 1 Y ear s in B s ines s Have T a u gh t u
ys te m , Se pt em b er , Oc to b er , N v e m be r , 1 9 1 6
”
Us , o .
108 MARK E TIN G PR OBLE M S
st o rage s pace Un d e r e a ch bra n ch w as a st aff o f m en
.

kn o wn as bl o ck m e n A t th a t ti m e th e a v e ra ge n u m b er
-
.

o f bl o ck m en t o a ge n e r a l a ge n c y w as e i ght
-
Th es e .

bl o ck m en w e r e th e p rin cip a l tra ve lin g s a l es m e n o f th e

-

c o m p a ny a n d its p o ints o f c o nt a c t with r e t a il m e r

ch a nts . Un d e r th e s e bl o ck m en w as a m o re o r l ess
-

m o bil e a n d c h a n gin g fo r ce o f ca nva sse rs m a ny o f ,

wh o m w e r e t em p o ra rily e m p l o y e d T h e ca nva ss ers

.
’

f u n ctio n was to ca ll u p o n fa rm ers a n d to a ssist r e t a il e rs

’
to s e ll t h e c o m p a ny s p r o d u cts .

E a ch r e t ail e r h a n d lin g t h e c o m p a ny s p r o du cts wa s

’

g iv e n a n e x c l u siv e a ge n cy fo r a bra n d o r bra n d s I n .

s o m e ca s es o n e bra n d w o u l d b e giv e n to o n e r e t a il er
in th e t o wn an d a n o th e r bra n d t o a co m p e tit o r .

Sa l e s to f a rm ers w e r e fr e qu e ntly m a de o n l o n g
c r e d its ,
th e f a rm e rs givin g p r o m i ss o ry n o t e s whi ch
we r e gu a ra nt ee d by th e r e t a il m er ch a nts w h o a ssum ed
th e r e sp o nsibi lity f or m a kin g c o ll e cti o ns .

A st o ck o f m a chin e ry a n d i m p l em e nts was ca rri ed

a t e ach wh o l e s a le h o u s e .St o cks o f r epa ir p arts w er e
a ls o ca rri e d th e r e T h e m a chin e s w er e shi pp e d t o th e
.

wh o l es a le bra n ch e s kn o ck ed d o wn I n s o m e ca s e s th ey
.

w ere a ls o s hipp ed t o th e far m e rs kn o ck e d d o wn the ,

c o m p a ny o f c o u rs e s ettin g u p th e m a chi n es f o r th e

fa rm ers a t ti m e o f d eliv ery T h e C o mm issi o n er o f

.

C o rp o r a ti o ns r ep o rt ed fr o m his inv e sti ga ti o ns th a t th e

p e r ce nt a ge o f s e llin g e x p e ns e w as hi gh er f or th e I nt e r
n a ti o n a l Ha rve st e r C o m p a ny th a n f or its com p e tit ors .

A sim ilar m e th o d o f wh o l esa le d istrib u ti o n is u s e d

’
by this com p any s la r ge c o m p e tit o rs .

Wh a t s p eci a l c o nsi d e r a ti o ns fa vo r th e e st ablish

m e nt a n d o p er a ti o n o f m a n u fa c t ur e rs
’
wh o l es a l e
bra n ch e s by th ese l ar ge i m p l em e nt m an u fact u r ers ?
 WH O L E SAL E TRA D E 1 09

78 . ST AN DA R D O I L C O M P A N Y
T he fo llo wing st a t em e nts r egar d in g th e p e tr o l eu m
in du stry w er e m a d e by t h e C o m m issi o n e r O f C o rp o r a
ti o ns in his r ep o rt o n th e p e tr o l e u m in d u stry l

T he pe cu li ar ch ar act eri sti cs o f p etro l e u m pro d u ct s h av e

led t o t h e d evel o pm en t O f s p eci al m eth o d s O f t r a ns p orti n g,
s t oring, an d d eliveri n g them Pi pe li n e s h av e b e e n co m
.

par at iv ely littl e u s e d f or h a n d lin g r efin ed p et r o l e u m , chi e fly

b ecau s e m o s t O f t h e r e fin eri e s a r e s o s it u a t e d th at a la r ge
part o f t h e m ore i m p o rt a n t m o v e m en t s ca n b e m a d e b y
wat er , an d b e cau s e t h e vo l u m e o f b u s i n e ss o ve r m o s t othe r
ro u t e s i s n o t s u ffici ent t o j u sti fy t h e c on str u ct i o n of a
i l tr an s port ati o n li n e
s pe c a .

A v ery l arge pro por ti on O f t h e m or e co m m o n pro d u ct s O f

p etr o l e u m i s h owev e r h a n d l e d b y b u l k m eth o d s
, ,
Ta n k .

st eam ers ar e u s e d f o r wat er tra ns port at i o n a n d t ank car s

fo r r a il M oreover b oth in thi s co u n try a n d in E u ro pe
.
, ,

ill u m inating O il i s very largely d eliver ed t o r et ai l d e al er s b y

m ea ns o f t ank wago n s a n d thi s s a m e m eth o d i s O ft en u s e d
,

fo r d eliv eri n g t h e p ro d u ct t o t h e fin al co n s u m er At l ea s t
.
,

in t h e Uni t ed St at e s t an k wago n d elivery i s al s o O ft e n

,
-

e m pl oye d f o r n a pht h a T h e b u l k sy st em O f tr a n s p ort ati o n

.

a n d d elivery i s m u ch ch ea p er th a n t h e u s e o f b a r r el s o r
o th er p ack a ges wh er ev e r t h e v o l u m e O f b u s i n ess i s l ar ge
, .

M o s t O f t h e t own s O f m or e tha n o n e o r t w o tho u s an d in h ab

it an t s in t h e Unit ed St at e s h ave t ank wa go n d eli v ery O f
-

ill u m inati n g O il .

A t th a t ti m e the s u bsi di ari es O f th e St a n d ar d Oil

C o m pa ny d elive r e d O il by t a nk Wa go ns thr o u gh th e ir ,

own wh o l es a l e o r ga ni z a ti o n in 8 1 % o f t h e t o wns f or
,

whi ch p u r ch as es fro m th e m w e re r e p o rt ed .

Wh a t co m p e titive a d va nt a ges d id th e St a n da r d O il
C o m pa ny o bt a in by m ea ns o f its syst em O f wh o l es a l e
d istrib u ti o n ?
1 Re o rt o
p f the Co mmis si one r of Cor po rati o ns on the P etro le u m
I n d us try P ar t I p 4 4
, ,
. .
1 10 MARK E TIN G PR O BLE M S
79 . C H E R O K E E OI L C O M PA N Y
T h e C h e r ok ee O il C o m pa ny has t blish ed O il es a

re fin eri es o n a lar ge s ca l e in s o u th e rn Tex as wh e re it ,

is a ssu r e d O f a s u pp ly O f cru d e O il I n wh a t m a rk e ts .

in th e Unit e d St a t e s will it p ro b ably b e a bl e to co m p e t e

m o st e ffe ctiv e ly with th e fo r m e r s u bsi d ia ri es o f th e
St a n d ar d O l C o m p a y ? Wh y ?
i n l

80 . AM E R I CAN SU GAR R E FI N I N G C O M PA N Y —
BR O K E R S
I n 1 9 12 a n ew p o li c y in the d e ve lop m e nt O f th e
s a l es O f a bra n d e d p r o d u c t was a nn ou n ce d by th e
A m e ri ca n Su gar R efining C om p a n y z
.

At th a t ti m e it was r ep o rt e d th a t th e A m e ri ca n
Su gar R e fi ni n g C o m p a ny p ro d u ce d 4 2% O f th e o u t p u t
O f s u ga r in th e c o u ntry A few y ears p r e vi o u sly th e
.

co m p a ny w a s s a i d t o h a v e co ntro ll e d o ve r 6 0% O f t h e

o u tp u t b u t by d isp o sin g O f its int e re sts in t h e b ee t

,

s u gar in d u stry this c o ntro l h a d b ee n s u bst a nti a lly

r ed u ced by 1 9 12 At th a t ti m e e x cep t f o r s o m e in
.
,

v e st m e nt h o l d in gs th e co m p a ny w a s c o n fi ni ng its
,

a ctiv e int e r e sts t o th e r e fi ni n g a n d s e llin g o f ca n e

s u gar . I ts r e fin e ri e s w ere l o cat e d a t N ew Y o rk ,

B o st o n Phil a d elp hi a a n d N ew O rl ea ns
, ,
.

1 I nf o rm at io n o n
p r o d u ct io n o f c r u d e Oil is giv e n i n t he a n n u al
r e po rts o f t he U S G e olo gical S ur v e y o n M i nera l R esou rces a n d i n
. .

tr a de papers s u ch as t he N a tiona l P etrole u m N ews See als o Re port .

of N a ti on a l Cons er va ti on C om m i s s i o n Vo l I I I p p 44 6 4 6 0 T h e plan
—
. . .
, ,

o f d is s o l u t io n O f t he S t a n d ar d O il C o m pa n y b y c o ur t d ec r ee is gi v e n ,

i n W S St e ve n s I n d us tr ia l Co mbi n ati o ns a nd Tr us ts pp 4 07 4 1 6
. .
, ,
.
-
,

4 62 4 6 3
—
. A goo d st at e m e n t o f t h e p r o pe rt ies a n d o pe r at io ns o f t h e
fo rm er s u b sidi ar ies o f t h e St a n d ar d O il C o m pa n y is giv e n i n S ta nda rd
Oi l S to cks p u bli sh ed b y t he G e n e r al Se rv ice C o r po r at io n N e w Y o r k
, , .

2 P ri nte r s I n k A u us t 1 19 12
’
pp 3 4
—
g , , ,
. .
 WH O L E SAL E TRA D E 111

I n B o st o n s u ga r w as s o l d d ir e ct by t h e r efin e rs
,

thro u gh th e ir o wn s a l es m e n t o wh o l es al e gro ce rs a n d
l a rge r e t a il e rs in tw e nty fiv e b a rre l l ots a n d u p wa r ds
-
.

T h e a v era ge r et a il e r b o u ght fr o m a wh o l e s a l e r o n e o r
two b a rr e ls a t a ti m e .

I n N ew Y o rk a n d o th e r p a rts O f t h e co u ntry s u ga r ,

was th e n s o l d thr o u gh br o k e rs I t w as s o l d by t h e
.

br o k e rs l ar ge ly t o wh o le s a l ers in l o ts O f a t l east twe nty

,

fiv e b a rr e ls f o r d e live ry d u rin g a s p e cifi e d p e ri o d O f

ti m e u s u a lly thir ty d ays E a ch wh o l es ale r o r l a rge
, .

re t a il e r o r d in a rily b o u ght t h r o u gh th e s a m e br o ke r ,

year a ft er ye a r .

T h e br o k e r was p a i d a c o m m issi o n by t h e r e fin e r O f
fiv e ce nts p er b a rr e l fo r N e w Y o rk s a l e s a n d t en c e nts
for o u tsi d e s a l e s A b arr e l O f s u ga r w ei ghs 3 50 p ou n d s
. .

T h e br o ke r p erfo r m ed th e r egu l a r br o k e ra ge f u n cti o n ,

with o u t a ss u m in g re sp on sibility fo r d e live ry o r

co ll e cti o ns
.

Su ga r h a d b ee n s o l d fo r y e a rs by wh o l e sa l ers a n d
r e t aile rs o n a n arr o w m a rgin O f p r o fit I t was a hi ghly .

st a n d a r d iz e d co m p e titiv e p ro d u ct O ft e n u se d as a
, ,

p ri ce l e a d e r .

T he A m e ri ca n Su ga r R e finin g C o m p a ny b e f o r e
1 9 12 h a d a lr ea d y b ee n s e llin g C ryst a l D o m in o Lo a f
s u ga r in p acka ge f o r m I n 1 9 1 2 it a nn o u n ced th e
.

intr o d u cti o n o f C ryst a l D o m in o G ra nu l a t ed in p a ck

a ge s. A t th e ti m e it w as st a t e d th a t t h e r e fin er s s e llin g ’

p ri ce O f p a ck a ge gr a n u l a t e d s u gar w as t o b e 3 1 0 O f a
ce nt p er p o u n d hi gh e r th a n b u lk s u ga r This a m o u nt .

w as t o c o v e r t h e co st o f p a ck a gin g T h e r e t a il e r w h o
.
,

p a i d 3 1 0 O f a ce nt m o r e p e r p o u n d w as ex p ect e d t o ,

ch a r ge o n e c e nt m o r e in r e s a l e th u s givin g wh a t w as
-
,

th o u ght to b e a fa ir p ro fit o n s u gar Th e re was a ls o a .

s a vin g t o th e r e t a il e r in h a n d lin g l e ss le s s i n w e i ghin g

, ,

an d s u ga r in p a ck a ge s it w a s st a t e d w o u l d b e c l ea n e r
, ,

a n d m o r e s a nit a ry I t w as a ls o st a t e d a t t h e ti m e th a t
.

th e p a c k a ge s u ga r w ou l d b e o f b e tt e r q u ality th a n
b u lk s u ga r .

T h e c o m p a ny a nn ou n ced th a t its initi a l e x p en d it u r e

for a d v e rtisin g w o u l d b e in N e w Y o rk C ity .

Sa m p lin g w as to c o nstit u t e a p a rt O f th e ca m pa i gn .
1 12 MARK E TIN G PR OBLE M S
Wh a t a ttitu d e w as it a d visa bl e fo r a l arge s u gar
bro k e r in N ew Y o rk in 1 9 1 2 to t ak e t o wa rd this p ack a ge
s u ga r O f th e A m e ri can Su gar R efinin g C o m pa ny ?

81 . I M P E R I A L C O LLA R M A N U FA C TU R I N G C O M P A N Y
C LO T H B R OK E R S
T he I m p eri a l C o lla r M a nu fa ct ur in g C om p a ny in
Tro y , N ew Y o rk , b u ys co tt o n cl o th in th e gr e y an d
h as it co nv e rt ed o n its o wn a c co u nt 1 This c l o th is
.

o r d in arily b ou ght thr ou gh br o k e rs . A br o k er in this

tra de , as in o th e r tra d es , is o n e wh o ac ts a s an a ge nt
in th e e x ecu ti o n O f o r d ers for b u ye rs or s e ll e rs T h e .

br o ke r d o es n o t h a v e title t o th e m er ch an di s e in th e
s a l e O f whi ch h e assists He is n o t i d entifi ed p erm a
.

u e ntly with a n y in d ivi d u a l b u y e rs o r s ell e rs He is

.

p a i d a c o m m i ssi o n ,
u s u a lly by t h e s ell e r , o n th e a m o u nt

O f th e s a l e .

Wh a t a d va nt age s a r e ga in ed o r di n arily by th e
co ll a r m a n u fa ct u rin g co m p any by b u yin g thr o u gh
br o k ers ?

82 . AP P ALAC H E E C O TT ON M AN UFA CT UR I N G C O M P AN Y
— D I R E C T SE LL I N G

T h e App alach ee C o tt o n M a n uf act u rin g C o m p an y ,

with a p lan t l o cat ed in G eorgi a , r ecently t o o k u p th e
1Se e M elv i n T C o pela n d , The Cotton
. M an uf actu ri ng I nd us try of
the Un ited S ta tes , pp 207— 2 1 7
. .
 WH O L E SAL E TRA D E 1 13

q u esti o n o f a ch an ge in its s ellin g p o li cy Fo r tw e nty .

y e a rs th e c o m p a ny h a d s o l d its p ro d u c t thr ou gh a c om
m issi o n a ge nt O u cu sto m ary t e r m s th e co m m i ssi o n ,

a ge nt r e n d e rin g cu st o m ary s e v i ces

r
l
b u t n o t h o l di n g ,

st ock in th e m an u fa ct ur in g c o m p any T h e co m mi ssi o n .

a ge nt h a d h ea d q u art ers in N e w Y o rk C ity .

T h e co m p a ny O p er a t ed sp in d l es a n d
l oom s I ts p r o d u cts w er e ch e cks p l a i d s co tt o n a d e s
.
, ,

o u tin gs ti cki n gs de nim s c h e vi o ts a n d co nvi cts

, , , ,

strip e s T h e p r esi d e nt O f th e co m p a ny w as th e chi ef

.

e x e cu tive O ffi ce r He w as n o t int ere st e d in a n y o th e r

.

c o tt o n m a n u f a ct u rin g co m p a ny Hi s O ffi ce was l o cat e d

.

a t th e m ill .

T h e co tt o n m a n u fact u rin g co m pa ny co ns i d er e d th e
d is co ntinu a n ce O f th e p l a n O f s e llin g t hr o u gh th e
co m m issi o n a ge nt I t co nt e m p l a t e d s e llin g d ir ect
. .

Wh a t d id s u ch a ch a n ge in its s e llin g p o li cy inv o lve

fo r this co tto n m an u fa ct u rin g co m pa ny ?

83 . B LU E R I D G E SP I N N I N G C O M P AN Y AN D K E YST O N E
M I LL S
f o ll o win g st a t em ent w as m a d e in a
T he m a rk e t
r epo rt o n th e co tt o n ya rn tra d e Fe bru ary 1 8 , ,
1919 :

M er chan t s h av e b een re ce ivi n g m an y Off er s fr o m s pi n

ners t o s en d ya rn s o n co n s i gn m en t t o b e s o l d a t t he b es t
,

p ri ce s th e y wi ll b ri ng T h i.s s o r t o f t en d e r i n g wo u ld b e

a cce pt ed in n o r m a l ti m e s At p r e s en t it i s f elt t hat if t h e

.
, ,

co n s i gn m e n t s w e r e n o t s o l d q u i ck ly t h e s p i n n er s wo u l d
,

b egin a s kin g f o r a dva n ce s an d t h e ya r n m e r ch a n t s a r e

,

tryi ng t o avoi d s u ch t hi n gs It is s u r m i s ed t hat if s p inn e r s

.
,

can get a d va n ce s o r ca n fin d m e r c h a n t s w h o wi ll s e ll c o n
s ign m e n t s a n d r em it s t ea d i ly th ey wil l k e ep their m i lls
,

1 M e lvi n T C o e la n d T he Co tto n M a n u actu r i n

p .
, f g I nd us try of the
Un i ted S tates , pp 209- 2 15
. .
1 14 MARK E TIN G PR OB LE M S
r u nning M o s t ya r n m er cha n ts in t hi s m ark et thi nk t he
.

t im e h as co m e t o q u it s pi n n i n g f o r a ti m e O t h erwi s e th ey.
,

b eli eve a v ery s eri o u s d ro p i n p r ice s will e ns u e d ue t o a c cu m u,

la tio n s O f yar n s E a s t er n s pi n n ers m o s t O f who m h e l d O ff a

.
,

l o n g ti m e b efo r e r evi s i n g pri ce s h ave b egu n t o p u t o u t

,

f ee l e rs f o r o r d er s a n d a r e getti n g s om e b u s i n es s Th eir .

p ri c e s a s q u o t e d S h o w l e ss d e m o r aliz ati o n th a n s o u th er n

yar n s T h e d em and f ro m weaver s web b i n g f act ori es u p

.
, ,

h o ls t e r y p l an t s a n d o t h e r s o u r ce s o f y a rn co n s u m pti o n c an
n o t c o n ti n u e m u ch l o nge r o n s u ch a lo w s ca l e a s th a t r e p o rt e d
r e cen t ly With y arn pri ce s r evi s ed thoro u ghly s om e l eadi n g
.
,

m er ch ant s e x p e ct a n i m pro v em en t s o on .

Un d er th es e m ark e t co n d iti o ns co m p ar e th e p o si
ti o ns o f tw o Sou th e rn c o tt o n s p innin g c o m p ani es th e ,

B lu e R i d ge Sp innin g C o m p a ny a n d th e K e yst o n e M ills .

T h e co m p a ni e s a r e O f ap p r o xi m at e ly th e s a m e siz e
with p la nts o f sp in d l e s e a ch E ach O f th es e .

c o m p a ni e s h as e n o u gh w o rkin g ca p it a l fo r its n eed s

u n d e r o r d in a ry co n d iti o ns b u t o nly a s m a ll s u rp l u s
,
.

T h e B lu e Ri d ge Sp innin g C o m p a ny h as s o l d d ir e ct .

T h e K e yst o n e M ills h a v e r egu l a rly s o l d thr o u gh a w e ll

e st abli sh ed fir m o f co mm issi o n age nts in N ew Y o rk .

84 . R O GE R S GR A Y
, C O M P AN Y
C O MM I SS I O N A G E N T S
R o ge rs , G ra y C om p any ar e a l o n g est ablish e d -

fir m O f co m mi ssi o n a ge nts in t h e t extil e b u s in ess .

Th ey ar e cl o s e ly i d e ntifi e d with th e m ill s f or w h i ch th e y

s ell . T h e m ills m a n u fa ct u r e gin gh am s , p rints , a n d
o th e r finish e d fa bri cs , a n d a ls o
gr e y go o d s Thi s fir m is .

o r ga ni z e d o n th e tr a d iti o n a l
p l an wh er eby th e r e is a
s ep a ra t e d ep art m ent fo r ea ch m ill in th e o ffice s O f th e
co mm issi o n a ge nt E ach tra v e li n g sales m an o r d in ar ily
.

s ells o nly fo r a sin gl e d ep ar tm ent .

 WH O L E SAL E TRA D E 1 15

T h e p r od u ct o f each m i ll is styl ed an d p ri ce d ea ch
s eas o n in d ep en d ently O f th e o th e rs , u n d e r th e ge n eral
s u p ervisi o n O f th e e x ecu tiv e s O f th e fir m N O s u p e r .

visi o n is e x e r cis ed O v e r th e m anu fa ct ur in g o p era ti o ns

in th e p l a nts M em b ers o f th e fir m a r e n o t treas u r e rs
.

o f a n y O f t h e m ills .

Wh a t s u gge sti ons sh o u l d b e b e giv e n fo r th e r e

o r ga niz a ti o n o f th e op e r a tin g p l an s O f this firm ?

85 . M I DD LE SE X C O M P AN Y —
E XP O R T D E P A R TM E N T
T heM i d d l es ex C o m p a ny is a co m m issi o n a ge n t in
th e t extil e b u sin ess I ts h ead q u art ers a r e i n N e w
.

Y o rk C ity with br an ch s al e s O ffi ce s l o cat ed in Bos

,

to n C hi cago St Lo u is San Fr a n cis co a n d thr e e

, , .
, ,

o th er citi es T h is c o m p a ny s e lls th e p r o d u c t O f a b o u t
.

fift ee n m ills l o cat e d in th e N o rth a n d in th e So u th .

Th es e m ills o p era t e o v e r sp in d l es Th e y p r o .

d u ce st a n d a r d gr a y go o d s a ls o co tt o n flan n els a n d
,

o th e r c o l o r e d y a rn go od s T h e s e llin g h ou s e c o ntr o ls
.

thr o u gh st o ck o wn ership ab o u t o n e h alf th e m il ls f or -

whi ch it s e lls I t h as a n a gr eem ent wi th e a ch m ill

.

wh e r eby th e co m mi ssi o n h o u s e give s directi o ns a s t o

th e q u a ntity o f ea ch styl e t o b e p r o d u ce d d u rin g th e
w ee k m o nth o r o th e r d efinit e p e ri o d O f ti m e T h e
, ,
.

a ct u a l m a n a gem e nt O f th e O p er a ti o ns o f ea ch m ill is

in th e h an d s O f t h e O ffi cers O f th e m ill co m p any .

This s ellin g h o u s e is c o nsi d e rin g th e e st a blish m ent

o f a n e x p o rt d ep a rt m e nt with its o w n r ep r es e nt a tiv e s

in f o re i gn m ark e ts to d e v e l o p t h e ex p o rt tra d e i n t h e
p r o d u cts O f th e m ills f o r whi ch it s e lls l H e r et o f o r e .

s o m e O f its goo d s h ave b ee n s o l d for e x p ort thr ou gh

o th e r ch a nn e ls .

Wh a t will th e M i dd l es ex C o m pa ny n ee d to co n
si d er in r eachin g its d ecisi o n r egar d in g th e e st ablish
m e nt O f th e e x p o rt d e part m e nt ?
1 16 MARK E TIN G PR O BLE M S
86 W H I T E. C O M P A N Y M A N U FA C T U R E
—
OF

G A R M E N T S B Y C O MM I S S I O N A G E N T S
I n M ay 1 9 1 3 it w as a nn ou n ced th a t Whit e
, ,

C o m p a ny a fir m O f c o m m i ssi o n a gents h a d d e ci d ed
, ,

t o O ffe r finish e d lin e s O f ap r o ns a n d r o m p ers m ad e fr o m

gin gh am s m an u fa ct u r e d in o n e O f th e m ills f o r whi ch
it s o l d A t th e ti m e this a nnou n cem e nt w a s m ad e
.
,

s om e O f th e tra d e r ep o rts ca ll e d a tt e nti o n to th e f a ct

th a t th e A m o sk e ag E v e re tt a n d Riv ersi de M ills a ll
, , ,

p r o d u ce rs O f c o l o r e d y a rn c l o th l a r ge ly u s e d in r ea d y
t o w ea r go o d s h a d tri e d o u t t h e p l a n O f iss u in g l ab e ls
-
,

t o b e d istrib u t e d t o th e m a n u fact u rin g tra d e s t o b e

a tt a ch e d t o ga r m e nts M any l ab e ls it w as st at e d
.
, ,

h a d b ee n u s e d o n ga r m e nts m a d e fr o m c l o th o f o th er
m ills . T h e p l a n p r op o s e d by this fir m O f c o mm issi o n
a ge nts in cl u d e d th e u s e o f t h e m ill s l a b e l o n t h e
’

g a r m e nts m a d e fr o m t h e p r o d u c t o f t h e m ill .

N u m e r ou s l a rge wh o l e s a l ers o p e ra t e garm e nt fa c

t o ri es an d th er e a r e a ls o h u n d r e d s O f s m all garm e nt
,

m a nu f a ct u r ers to wh o m th e s e gin gh am s p r e vi ou sly

h a d b ee n s o l d .

I t w as fu rth er c o nt em p l a t ed a t th e tim e this an

n o u n cem en t wa s m a d e th a t if it w er e s u cce ssfu l it
, ,

sh ou l d b e e xt e n d ed t o th e m a n u fa ct u r e o f p aj am as ,

ni ght go wns u n d erw ea r e t c , ,

.

D oe s this a pp ea r t o b e a p ra cti ca l p l a n f or th e
co m m issi o n h ou s e t o a d o p t ?

87 . T E XT I LE BAN K I N G C O M PA N Y
I n M ay 1 9 1 9 a j o int a nno u n cem e nt was m a d e by
, ,

th e G u ar a nty Tr u s t C om p a ny o f N ew Y o rk a n d th e
Lib erty N a ti o n a l Ba n k th a t in co rp o ra ti o n pape rs O f
 WH O L E SAL E TRA D E 1 17

th e T extile B a nkin g C o m p a ny I n c h a d b ee n fil ed in ,
.
,

A lb a ny a n d th a t t h e n ew c o rp o r a ti o n w ou l d O p e n fo r
,

b u sin ess as s o o n a s th e c h art er w as gr ant ed I t wa s .

st a t e d th a t th e co m p a ny s h ea d q u a rt ers w er e t o b e in
’

th e U p t o wn wh o l e s a l e d r y go o d s di stri ct
-
T h e n ew .

co m p a ny w as st a t e d t o h a v e t h e b a n k in g s u pp o rt o f

b o th th e b anks m a ki n g t h e a nn o u n ce m ent T he .

fo ll o win g st a t em ent was m a d e r egar d in g its p lans 1

T h e T e x til e B an k in g C o m p an y will p er fo r m t he f u n cti o n s

o f b an k e r f o r m ill s in t h e t e x til e i n d u s try, whi ch f u n cti o n s
h ave b een p er fo r m ed f o r m a n y y ea r s b y fir m s kn own as
f a ct or s o r c om m i ss i o n h o u s e s I n a dd iti o n t h e c o m p an y
.

will fi na n ce t h e f u nd am en t a l r equ irem en t s o f mi ll s , s u ch as

t heir r a w m at eri al s , a n d in m any o ther ways o ffer t o t he
m ill s s ervi ce whi ch wil l b e v ery h elpf u l in t he o per ati o n a n d
e x p ans i o n o f th eir b u s i n es s .

T h e P eli ca n Silk M ills a m edi u m siz e silk m anu

,
-

fa ctu r in g c o m p a ny in N e w J ers e y n ee d s fin a n ci al ,

a ssist a n ce in ca rryin g o n its b u sin e ss b e cau s e its ,

w o rkin g ca p it a l is s m all Wh a t a d va nt ages wi ll th e

.

i c ri
s lk m a nu fa t u n g c o m p any o bt ain fr o m s ecu rin g
1

fin an ci a l a ssist a n ce fr om a b a nk s u c h as this r ath er

th an fro m a co m m issi o n h ou s e ?

88 . C A ST I N E M A N U F A C T UR I N G C OMPAN Y —
SA LE S
DE P A R T ME N T AN D ST O C K D E P AR T M E N T
T h e C asti n e M a n u fact u rin g C o m p any O p era t e s a
l ar ge w o rst e d m ill in N ew E n gl an d , m ak in g go o d s fo r
’ ’
b o th m e n s a n d w o m en s w ear ’
This co m p a ny h as .

Jam es C hi tt ick , S i lk M a n uf actu ri n g

1 a nd I ts P roble m s ; al so Da il y
N ews Reco r d , A p r il 9 , 1 9 20, p 1 . .

2
P . T . T he W l I n d s try; A m e ric a n W l
C h e ri n gt o n , oo u oo a nd

Cotto n o
R ep rter , A pr il 2 , 1 9 1 4 , p 4 39 ; U ni t e d St a t es T amfi B o ar d
'

.
,

Re po rt u
on S ch ed le K , p p 8 4 7 c l s e q
. .
 MARK E TIN G PR O BL E M S
d eci de d t o s e ll d ire ct inst ea d O f thr o u gh a co m m issi o n
a ge nt . Wh a t cl asse s O f b u yers c o nstit u t e its p o t enti a l
m ark e t ? Wh a t m a rk e t inf o r m a ti o n will it n ee d cu r
r en t ly f o r its s a l e s d ep a rt m e nt ?

T h e co m p a ny , f u rth er m o r e , is co nsi d e rin g wh eth e r

it sh ou l d p l a n to a rra n ge a st o ck d ep art m e nt t o carry a
st o ck o f fi n ish e d go o d s Wh a t fa ct o rs m u st b e c o n
.

s id er ed in r ea chin g a d e cisi o n o n this q u es ti o n ?

89 . FU R N I T U R E E X H I B I T I O N S
I n th e f u rnit u r e tr a d e an e xhibiti o n is h el d twi ce a
y ea r a t G r a nd R ap i d s Si m i l ar e xhibiti o ns a re h el d
.

a t C hi cago a n d a t o n e o r t w o o th e r p o ints .

A t th e e xh ibiti o n in G ra n d R ap i d s f o r ex am p l e
, ,

s am p l e lin e s o f fu rnit u re ar e d isp l ayed by m an u fac

t u r er s
. T h e e xhibiti o ns a r e a tt e n d ed by b u yers fr o m
a ll p a rts o f th e co u ntry . I n J u ly 1 9 1 6 fo r inst a n ce it
, , ,

wa s r ep o rt e d th a t a t th e e xhibiti o n in G ra n d R ap i d s ,

330 m a n u fa ct u r e rs d isp l ay ed th e ir li n e s a n d th a t th e
e xhibiti o ns was a tt e n d e d by b u y ers So m e o r de rs
.

ar e giv en a t th e e x hibiti o ns . I n o th e r inst a n ces th e ,

b u ye r wa its fo r th e ca ll O f a s a l e s m an fro m th e m a nu
fa ct ur e r to p l ace his o rd e rs d efin it ely .

Why sh ou l d th e H u d s o n C o m p any a l ar ge fu r n i
,

t u re r e t a iler in N ew Y o rk C ity s e n d a r ep r e s e nt a tiv e

,

t o t h e G ra n d R ap i d s e xh ibiti o n ?
Wh y a re th ese e xhibiti o ns a n eco n o mi ca l a ge n cy
for a fu rnitu r e m a n u fa ct u r e r f or e x am p l e wh o s e p l ant
, ,

is lo ca t ed in s ou th ern Oh i o ?
 WH O L E SAL E TRA D E 1 19

90 . C H I C A G O C O M M I SS I O N M E R C HA N T
I n th e tra d e in p erish abl e f a rm p ro d u ce th er e ar e
s evera l mi d d le m e n 1 Whil e ea ch typ e i s d istin ct in .

p rin ci p le i n p r acti ce th e re a r e fr e q u e nt i n st a n ce s O f
,

o v e rl a p p in g in f u n cti o ns T h e c hi e f m i d d l e m e n i n t h e .

trad e in p erish able f a rm p ro d u ce in t h e l a r ge c iti e s a r e

th e car lo t wh o l e s al e rs t h e co mm i ssi o n m e r ch a nts t h e
-
, ,

j o bb e rs a n d t h e bro k e rs
, .

T h e ca r lo t wh o l e s a l e r b u ys in car l o ts o n his o w n
-

a cco u nt a n d s e lls in s m a ll e r l o ts t o j o bb e rs .

T h e c o mm issi o n m e r ch a nt r e ce ive s shi p m e nts o n

c o nsi gn m e nt fr o m co u ntry shi p p e rs a n d o cc a si o n a lly

fro m f arm ers He is p ai d a c o m m issi o n c o m m o nl y

.
,

ab ou t 7 O f t h e s ellin g p ri ce He h a n d l e s ea ch .

co nsi gn m e nt th a t h e r e ce iv e s a cco r d in g t o his o w n

j u dgm ent Th es e co nsi gn m e nts m ay b e in car l o ts o r

.

in l ess th a n car l o ts T h e c o m m issi o n m er ch a nt s e lls .

t o j o bb e rs o r t o r e t a il ers He c o ll e cts p a y m e nt a n d .
,

a ft e r d ed u ctin g his co mm issi o n a n d a n y in ci d e nt a l

e x p e ns e s h e r em its th e b a l an ce t o t h e shi pp e r .

T h e j o bb e r is a m er ch a nt d ea lin g o n his ow n
a ccou nt He p u r ch as e s o u tri ght th e go o d s th a t h e
.

h an d l es He s e lls t o r e t a il ers a n d p erfo rm s th e u s u a l

.

wh o l e s a l e f u n cti o ns .

T h e br o k e r a cts a s a n a ge nt f o r shi pp e rs O f ca r l o ts .

H e is p a i d a co m m issi o n He m a y or h e m a y n o t .

c o ll ect p a ym e nt f o r t h e m e r ch a n d is e th a t h e s e lls .

B e fo r e cl o sin g a n y tra ns a cti o n h o w e v er h e m u st , ,

O bt a in c o nfir m a ti o n fr o m t h e shi p p e r a s t o p ri ce a n d

t erm s O f s al e T h e br o k er ge n era lly h a n d l e s a m u ch

.

g O f far m pr o d u ce : L D H We ld
1 R e fe r e n ces o n t he m a rk e t i n . . .
,
The M a r keti ng of Fa r m P r od ucts ( b ib lio gr a h y) A na ls of the A me ri ca n , . n

A cad em y of P oli ti ca l a nd S oci a l S ci ence e p te m be r 1 9 1 1 N o v e m be r , , , ,

1 9 13. G K . Ho lm es Syst e m s o f M a r k e t in g Fa r m P r o d u cts

.
,
“

Un i ted S tates Dep a rtme n t of A gr i cu ltu re R epo rt N o 9 8 1 9 1 3 R po rt ,

.
,
. e

of th e M a yo r s M a r ke t C o mm is s w of N ew Yo r k C i ty E G
’
19 13 n ,
. . .

N o urse T he C hi ca go P r od uc e M a r k t ( b ib lio r a p h y) Art h ur B

g
,
e . .

Ad a m s ,
M ark e t i g P e r is h a b le Far m P r o d u c ts
“
n C olu m bi a U i ersi ty n v

S tud ie s Vo l LX I I N O 1 7 0 . J H C o lli s ,
.W Fish e r Jr a d . . . n , .
,
.
,
n

We lls She r m a n M e t h o ds o f Wh o les ale D istr ib u t io O f Fr u its a d

,
“
n n

Ve ge t ab les o n L ar ge M ar k e ts U t d S ta t s Dep rtm en t of A gri cu lt u re

”
,
ni e e a ,

B u lleti n N o 26 7 Fe d e r al T r d e C o m m i io n R port o th Whol s l

. . a ss ,
e n e e a e

M a r k ti g of Food 1 9 20 T h e U it e d St t es D e part m e t o f Agr ic u lt u r e

e n ,
. n a n

is s u e d N o v e m b e r l 1 9 1 5 a com prehens iv e Di st of P u blica tio ns o n the

, ,

M a rketi n g of Fa r m P rod u cts .

1 20 MARK E TIN G PR O BL E M S
s m a lle r p o rti o n O f t h e tr a d e th a n th e car lo t wh o l es a l ers
a n d c o mm issi o n m e r ch a nts .

Su pp o s e th a t a n e w fir m is t o b e o r ga niz e d t o ca rry
o n a c o m m issi o n m e r ch a nt b u sin ess in v e ge t a bl e s i n

C hi cago with a m p l e fin a n ci a l r es o u r ces Wh e r e w ou l d .

it p r ob ably fin d it a d v a nt age ou s t o s e ek a l o ca ti o n f or
its st o r e ? Why ? Wh a t a r e t h e d rawb a cks t o t h e
s e l ecti o n O f th a t l o cati o n ?

91 . SO U R C E S OF SU P P LY FO R B O ST O N C O MM I S S I O N
M E R CHAN T
Fr om wh a t s o u r ce s l d oe s a co mm issi o n m er ch a nt in
B o st o n d e a li n g in b e rri e s a n d v eget abl e s r eceiv e shi p
m e nts ? Ho w d o th e c o n d iti o ns a s t o t h e s ou r ce s O f
shi p m e nts a ff e ct th e o peratin g e xp ens es o f th e
c o m m issi o n m e r ch ant ?

92 . W I LLI AM B LA C K W O O D —
SE LLI N G FAR M P R O D U C E
FO R C HI CA G O M AR K E T
M r William B la ckw o o d a fa rm e r l o ca t e d a b o u t
.
,

6 0 m il e s s ou th o f C hi ca go with goo d r a ilr o a d c o n n e c

,

ti o ns d esir es t o s e ll fr esh v ege t ables in th e C hi cago

,

m a rk e t Th er e is littl e o p p o rt u n ity f o r o rganizin g a

.

l o ca l coop era tiv e a sso ci a ti o n o f p r od u cers an d f ew ,

b u y ers r egu la rly visit th e t o wn .

1 C it y P lan ni n g Bo ar d , M a rke t S i tuation i n Boston , 19 1 6 .

 WH O L E SAL E TRA D E 1 21

On 3 0 r s o f his fa rm h e h as a l a r ge p r o du cti o n o f
ac e
fr esh v ege t abl e s l e ttu ce b ee ts s p in ach carr o ts
, , , ,

sq u ash r a d ish es o ni o ns a n d o th er v ege t abl e s H e is

, , ,
.

p r o d u c in g u n d e r typ i ca l c o n d iti o ns p l a nnin g h is w o rk

,

s ci e ntifi ca lly s o th a t h e h as v ege t abl e s in th e m a rk e t

fr o m t h e m i d d l e O f M ay u ntil l a t e f all He u tili z e s .

ce rt a in a cr ea ge in r o t a ti o n s o th a t it p r o d u ce s t w o

cr o p s p er s e a s o n .

Wh a t m eth o d s c an h e u se fo r m a rk e tin g his p r o d u cts

in C hi cago ? Whi ch m e th o d is lik ely t o b e pr e f e r a bl e
1 ?

93 . C O MM I S S I O N M E R C H A N T AN D J O BB E R
A shi pp e r b erri e s in th e So u th wish e s t o e st a b
Of

li sh a n ew c o nn ecti o n with a c o mm issi o n m e r ch a nt in

B ost o n He h as a c h o i ce b e tw e e n tw o fir m s e ach w e ll
.
,

e st ablish e d a n d str o n g fin an ci a ll y O n e o f th e s e fir m s
.
,

th e D o r ch est e r C o m p a ny d o e s o nly a co m m i ssi o n

,

b u sin e ss ; th e o th e r th e R o xb u ry C o m p a ny a cts a s a
, ,

co m m issi o n m e r ch a nt a n d a ls o o p e r a t e s o n its o w n

a ccou nt a s a j o bb e r .

Whi ch o f th es e fir m s is to b e p r e fe rr ed by th e
shi pp e r ?
‘E. G N o ur s e Th e Chi ca go P r od uce Af a /
. . te l r .
1 22 MARK E TIN G PR O BL E M S
94 . FR U I T A UCT I O N S
T h e ge n e r a l m a n a ger o f a l ar ge fru it shi p p in g
o r ga niz a ti o n i n t h e W e st d e sir e s a r e p o rt o n t h e sy s t e m

o f fr u it a u cti o n s i n B o st o n 1 Wh a t info rm a ti o n sh o u l d
.

be em b o d i e d in this r ep or t ?

95 . T E R M I N A L M AR K E T B O ST O N
T hef o ll o win g r e c o m m e n d a ti o n w a s m a d e by t h e
M ass a ch u s e tts C o m m issi o n o n th e C o st o f Livin g i n
a r ep o rt d a t e d J a n u a ry 2 2 ,

I n any p l an fo r i m pro ve d t r an s po r t atio n co n diti o n s a n d

b ett e r t er m i n a l f a ci liti e s , p ro vi s i o n s h o u l d b e m a d e f o r a
wh ol e s ale t e r m i n al m a rk et T h e who le s al e p ro d u ce m ar k et
.

in B o s t o n is l o ca t e d in a d i s t r i ct W h er e it w as e s t ab li s h e d
n ea r ly a c e n t u r y a g o Wit h t h e growth o f t h e m etro polit a n
.

d i s t r i ct , a n d t h e ch a n ge s in t h e r el ati o n o f t h e B o s t o n m ark e t
t o th e o th er citi es in t h e C o m m o n wealth , t h e O ld m a r k e t
d i s tri ct h a s b eco m e m o r e a n d m o r e co n ge st e d B e ca u s e o f.

t h e l a ck o f t e rm in a l f a ciliti e s l a r ge q u a n titi e s O f p er i s h ab l e
fr u it s a n d v e ge t ab l e s a r e ca rt ed t o t h e m a r k e t a n d t h en
ca rt e d b a ck t o t h e f r ei gh t y ar d s t o b e r e s hi pp e d t o o t h e r

citi e s . Un n e ce ss ary ca r ti n g a n d l o ss fro m e x p o s u re co s t

hu n d r e d s o f t h o u s a n d s o f d o l lar s e a ch year We b eli eve .

th a t t h e r e t ail a n d j o bb i n g m a r k et s a r e n o w co n ven i e n tly

l o cat e d , b u t th a t a who l e s al e m a r k e t f o r co m m i ss i o n m e r
c h an t s a n d o t h e r l a r ge r ece ive r s o f p r o d u ce s h o u ld b e e s t ab

lis h e d a t t h e t e r m i n a l in So u t h B o s t o n S u ch a t er m i n a l
.

l ou o u o
A b r ie f a c c n t O f s m e e x pe r ie n ce s wit h a c t i n s i n N e w Y o rk
o u
C it y 1s giv e n i n t h e S ec n d A n n a l R eport of the Dep a rtm en t of F ood
a n d M a r kets , N ew Y r k o .

2 M ass ach u s e tts C o m m issio n o n t he C ost o f Livi n g , R e po rt on

R elati on of T r a n s p orta tio n to P r ices , Ja n u a r y 2 2 1 9 1 7 p p 4 5 , , Se e
.
-
.

a ls o R epo rt of th e T e r m i n a l C o m m i s s i o n o n T e r m i n a l Fa ci li ti es M a ss a ,

ch us etts S e n ate Doc u m e n t N o 4 0 1 , A p r i l 1 , 1 9 1 6

.
.
 WH OL E SAL E TRADE 1 23

m ark et wou l d b enefit co n s u m e r s in B o s to n an d nu m e ro u s

o t h e r citi e s ; it wo u l d a l s o a ff o r d b e tt e r m ark e ti n g f a ciliti e s
to f ar m ers thr o u gh o u t t he St a te .

D is cu ss this re co mm e n d a ti o n from th e st a n d p o in t
( )
a of wh
a car - lo t o l e s a l e r in B o sto n d ea lin g in b e rri es

a n d v e ge t a bl e s ( b ) o f a c o m m i s si o n m er ch a nt w h o a ls o
,

h as a s u bst a nti a l a m o u nt o f j o bb in g b u sin ess .

96 . W E AT H E R H E A D C O M P AN Y TE R M I N A L
—
M AR K E T S ,

N E w YOR K C I TY
T h e f o ll o win g st a t em e nt s u mm a riz e s th e c o n cl u
si o ns o f t h e M a y o r s M a rk e t C o m m issi o n o f N ew Y o rk
’

C ity in

T he fo r egoi n g a n alys i s o f pr e s ent co n d itio n s s ho u l d

m ake cl e ar t h e fa ct t h a t t h e m ar k e t i n g o f fa r m pr o d u ct s in
this city t o d ay i s a pr ob le m o f d i s tri b u tio n f ro m t r a n s por
t at io n t e r m i n a l s ; it ca n b e m a d e e ffi c i e n t o n ly b y t h e co
o r d inati o n O i t h e c o ll e cti o n , tr a ns po rt a t i o n , a n d d i s t ri b u ti o n
o f f o o d s t u ff s
. I n o th e r wo r d s , we m u s t d eve lo p t h e ty pe o f
m arket h er e t ha t w ill m ak e f o r t h e q u i ck e s t r e cei pt an d
d i s po s a l O f go o d s We m u s t e d u cat e s hi p p er s t o t h e a d v an
.

t age s a n d n ee d s O f t hi s m a r k et a n d t h e m et h o d s t o b e
e m pl oye d by t h e m t o e n s u r e q u i c k m ar k e t i n g o f t h eir g o o d s ,

a n d t h e b u yi n g p u b li c h er e t o wa t ch m ar k e t c o n d i t i o n s s o
that th ey m a y b u y m o r e i n t e lli ge n t ly a n d s o t ha t t h ere m a y
b e po p u l a r d e m a n d fo r t he go o d s t ha t a r e p le n ti fu l O n ly .

a m arke t whi ch d i s tri b u t e s f o o d s t u ff s q u i c k ly a n d e co n o m

iea lly will en co u r a ge pr o d u c e r s t o s h i p t o it .

A s t u dy o f t he geo gr a p hy o f t he city , t he pre s en t c o n

d it io ns a n d m eth od s o f m ar k e ti n g , 1 e , c o n ge s ti o n a t d own
. .

t own t erm i n al s , i n a d e q u a cy O f pr e s e n t t e r m i n al s a m o u n t o f
,

tr u ck i n g a n d l o n g t r u c k h a u l s n e ce ss ary , e t c , t he d i ffi cu lti e s
.

tha t co nf ro n t s hi p per s , a n d t he fo r ce s t ha t n o w o per at e t o

Re p1 o rt of the M a yo r ’
s M a rke t Co m m is s io n , N e w Yo r k C ity 1 9 1 8
, ,

pp 10-1 1
. .
1 24 MARK E TIN G PR O BL E M S
kee p go o d s fr o m r e a chi n g o u r m ark et po i n ts t o t h e co n
,

e l u s i o n th a t t h e e s t ab li sh m en t o f l a r ge t er m i n a l wh o l e s a l e
m arket s in t h e fiv e b or o u ghs o f t h e c ity is t h e fir s t e ss en ti a l
s t ep in t he b ett eri n g O f co n diti o n s We h av e in t hi s city
.

t w o d i s tinct pr ob l e m s t he pr ob l e m o f t h e pri m ary o r

—

who l es al e m ark et in g of t h e go od s wh en they r ea ch t he c ity

in l arge u n b rok en l ot s a n d t he prob l em o f r et ail d i strib u ti o n
, .

Thou gh inv estigati o n s hows t h e l ar ges t i n cr ea s e in pri ce s

to b e ad d e d b y r et a ili n g it al s o s h o w s t ha t t h e gr e at e s t
,

hindrances t o e ffi ci en t d i s trib u ti on e x i s t in t h e wh ol e s al e
m ar k eti n g o f t h e f o o d pr o d u ct s r e ceive d h er e P a rt o f t h e .

high co s t o f r et ailing is d u e t o t h e q u an tity a n d kind o f

s ervi ce th at t h e b u s ines s d em a n d s as co m par e d with wh o l e
,

s aling a n d p a rt is d u e t o a l a ck o f r e s p ons iv en e ss o f r et a il
,

m ark et s to co n diti o ns o f s u p p ly b ecau s e o f t h e chao ti c

,

c on d iti on o f t h e pr e s ent wh o l e s al e m a rk et Pr o d u cer a n d

.

co ns um er ar e n ot kept f a r a p art n o w by t h e r et ail ers t o an y

s u ch d e gr ee as th ey a r e by t h e c u m b er s o m e m et h o d s o f
whol es aling We have in t h e city a l ar ge n u m b er of
.

s m all gr o cery an d p r o vi s i o n s t o r es whi ch s erv e t h e p e opl e

very well Th ey cat er t o t h e ne ed s of their r egu l ar cu s
.

t o m er s an d ar e con ven i e n t s u pply d epo t s f or a p art m ent

ho u s e dwellers wh o have n o r o o m t o st ore s u ppli es a n d wi sh
t o b u y o ft en an d n earb y A typ e o f m u n i ci p a l r et ail m ark et
.

that can com pet e with th e s e n ei ghb orh o od s t or es h as yet

t o b e d e ve l o ped .

C on s u m ers as a cl as s ar e int ens ely co ns ervative a n d s l ow

to change e s t ab li s h ed h ab it s I f they ar e u s ed t o m ark eting
.

in a cert ain way at cert ai n kind s o f sto re s they ar e n ot e asily ,

ind u ced t o change It wo u ld b e u s eles s t o s pe nd pu b li c

.

m o neys o n a s ys t em o f r et a il m u n i ci p a l m ark et s t h e s u cce ss ,

o f whi ch wo u l d d ep en d u p o n a con s i d er ab l e cha n ge in t h e

hab its of t h e bu yi n g p ubli c an d in th e aim s of m ar k etm en .

T h e p oss ibility th a t t h e city cou l d off er s pa ce in it s r et a il

m ar kets to d eal er s at l owe r r e nts than th o s e d em an d ed in
oth er b u il dings d oes n o t n ece ss arily m e an th a t f or th at
r eas on t h e d eal ers wo u ld s ell go od s chea ply On th e con .

t r ar y the ir low r ents an d t h e ne cess arily hi gh er pri ces

, ,

o u t s i d e wo u l d give th em a ch an ce f o r a pro fit whi ch p r e vi o u s

,

e x p eri en ce in d i cat es th ey wo u l d n ot s h ar e wil li n gly with t h e

p u bli c Thi s co n d iti on w as fo u nd t o p reva il in o n e of t he

.

r et ail m arkets o f B er lin It i s d i ffi c u lt t o see how it co ul d b e

.

a vo i d ed in a p u b li c r et ail m ark et u nl e ss t h e city it s el f

, ,

thr o u gh its em pl oyees went int o t h e a ctu al b u yi n g a n d

,

s elling o f f o od in t h e m ar ke t s o r a tt em pt e d a s ys t em o f
,

pri ce r egu l ati o n pr a cti ce s wh o s e d e s ir ab i li ty i s q u es ti o n

-

ab l e . Ret ail pri ces wi ll b e l ower ed whe n all ar e given f a cil

itie s f o r b u yi n g cheaply a n d when t h e f or ces o f d em and a n d
s u pp ly ar e giv e n f r ee pl ay .
 WH O L E SAL E TRA D E 1 25

Sys t em s m u ni ci pal r et a il m ar k et s h ave n ot b ee n a

of

s u ccess wh er e tri e d in l ar ge c iti e s u n d e r c o n d iti o n s si m il a r

to o ur o wn I n B erli n 1 2 m arket s o u t O f a s y st e m o f 1 4
.

h ave b een ab ando n ed Th ey have b e e n gr a d u ally giv en u p

.

a n d t h e b u il d i n gs t u rn e d o v e r t o o th e r u s e s. T h e s a m e t hi n g
has h ap p e ne d in P ari s , wh er e o u t o f a n o ri gi n al sy s t e m o f
33 o n ly h alf a r e n o w in o p erati o n . O nl y t ho s e i n d i r e ct
c on ne cti o n with t h e t e r m i n a l m ar k e t s h a v e b ee n f o u n d t o
b e o f v al u e T h e ca s e o f J e ff er s o n M ar k e t in N e w Yo rk is
.

typi cal o f what h a ppe n s h ere a n d e ls e w h er e wit h thi s type

o f m ark et . T h e tr a d e i n Fu lt on a n d Was hi n g to n M ar k et s
is b e com ing m or e a n d m or e a j o bb i n g t r ad e a n d l e ss a r e t ail
trad e— s u pplyi n g large cu st o m er s li k e b o ard i n g h o u s e s , -

hot el s , a n d re st au ra n t s T h e m o s t fl o u r is h i n g p u b li c m ark et
.

w e h a ve n o w i s We s t Wa s hin gt on , wh i ch i s a wh o l e s a l e
m ar ket , a n d , in a way , a t er m i n a l m ar k et , t h o u gh it s p o ss i
b ilit ies a s s u ch in t h e w a y o f wat er fro n t d ev e l o pm e n t a n d
r ailr o ad co n n e ctio n h ave n ot b een m a d e f u ll u s e o f A s it .

is , it p ays t he city a profit of a n n u ally on t h e

inves tm en t .

Wh at ever f or m t he r et ail d i s trib uti on h ere ev en t u ally

t akes— wh ether it b e privat e s t or e s , m u n i ci p al m ark et s ,
c oo p er a tiv e s t or e s , o r wh a t n o t it will b e e ss e n ti a l t o h a v e
,

a l ar ge , we ll o r ga n iz e d wh o l e s a l e m ar k e t in e a c h b or o u gh
-
.

Th at is t he fi r s t st e p T h e ty pe o f r et a il di s trib u t or i s o f
.

little i m p ort ance , if it h as d i fficu lty in getti n g s u ppli e s .

T h e i d e a o f who l e s al e t e r m i n al m a r k et s is n o t n e w
o u t s i d e o f N e w Y o rk ; it i s n o t n e w in N e w Y o rk , b u t it h a s

yet t o b e r eco gn iz e d a n d a pp li ed her e in a l ar ge w ay . In

B erli n they h ave h a d a wh o le s a l e t erm i n al m ar k et f o r o v er
twenty year s , t h e o n ly f a u lt b ei n g t hat it i s n ot n e w l ar ge
e n o u gh t o a cco m m o d a t e t h e tr a d e t h a t s ee k s it ; th e y h av e

o n e in M u n i ch , in Fr an k fo rt , L o n d o n , a n d o th e r c iti e s
ab r o a d . It i s t he r e co gniz e d ty pe o f m u ni ci p al m ark et in
t he l ar ger c iti e s o f G e r m a n y , w h e r e t h ey h ave give n t h e
s ub j e ct c l o s e s t u dy It s e ffe ctiven e ss li e s in t h e f a ct that
.

s u ch a m ar k et c u t s o u t u n n e ce ss ary s t e p s it d oe s n o t
—

intr od u ce ra di cal ch a n ge s in b u s i n es s m et h o ds , b u t r athe r

give s b u s ine ss m en t he m ea n s f o r m o r e e ff i ci e n t s ervi ce . It
i s a xi om ati c th at b u s i n ess i s co ns ervative a n d s l o w t o cha n ge
its m etho ds a n d ha bit s We re co gni z e t he f u tility o f pr o
.

p o s i n g r a d i ca l ch a n ge s t h eor eti ca lly a ll u ri n g o r u ntri ed

m et ho d s t h at will m e e t with d i s t r u s t .

T h e l a ck O f sy s t e m in t h e wh o l e s al e m ark eti n g h er e
to d ay i s a h an d i ca p t o e ffi ci e n t s er vi ce a n d a ca u s e o f grea t
e x p en s e . This e x pen s e i s O f three k i n d s : o n e t he a ct u a l
,

co s t a d d e d t o t h e go o d s f o r t h e tr u cki n g a n d r e h a n d li n g
nece ss ary ; t w o , t h e lo ss o f go o d s d et e r i o r at e d thro u gh
e x p o s u r e t o h ar m f u l t e m p er a t u r e s a ft e r u n l o a d i n g f r o m t h e
c ar s o r thr o u gh b r u i s i n g in b e i n g h a n d le d m a n y ti m e s ; a n d ,
1 26 MARK E TIN G PR OBL E M S
three t h e l o ss o f go o d s ke pt f ro m m ark et be cau s e o f t he
,

l a ck o f f aciliti e s Th e s e thr ee f a ct or s wo u l d b e e li m i nat e d

.

in pro per t er m in al m arket s It is li k ely al s o th at in ti m e

.

t h e e x pen s e a n d l o ss in r egr a d i n g go o d s wo u ld b e r ed u ced

a s t h e m ark et m a n a ge m e n t m a k e s kn own t hr o u gh o u t t he

pro d u ci n g s e ctio n s t h e m etho d s o f gra d i n g a n d m arke ting

is o f three kind s .

T h e d i s trib u ti o n o f f o o d in t h e city t o d ay as h as b ee n ,

s hown t ak es pl ace chi efl y fr om t h e prim ary m ark et in l ower

,

M anh att an Whil e it i s tr u e th at in m o s t pl a ces t h e i d eal

.

co n d iti o n is t o h a v e t h e wh o l es al e m ark e ti n g d o n e i n o n e

p la ce wh er e all b u yer s a n d s e ll er s m ay c o n gr egat e an d th at

, ,

a d i v i s i o n o f t h e wh o l e s a l e m ar k et r e s u lt s in a l o s s in e co n

o m y t h e r e s u lt s o f t h e p o li cy O f c o nce n tr ati o n th a t c o nf ro nt
,

u s t o d ay in N e w Y o rk l e ad t o t h e c o n cl u s i o n th at gr e at er

e co n om y will b e e ff e ct e d in thi s city by a d ivi s i o n o f t h e

p ri m ary m arket a m o n g t h e fiv e b or o u gh s N ew Y o rk C ity .

is d ivi d e d by n at u r al wat erway s an d politi cal lines i n t o

what ar e pr acti cally fiv e citi es It h as gr own t oo l arge t o .

d e pend o n on e m ark e t an d t h e tr a d e in th at m arket h as

,

gro wn t o s u ch pr o p orti o n s th at w e co u l d h ar d ly b u il d a
t erm inal m arket large e no u gh t o a cco m m o d at e it witho u t
co nge s ti o n E ve n if we co u l d it wo u l d n ot d o awa y with
.
,

t h e ne ce ss ity O f having j ob b er s m arket s t o r e a ch o u t t o t h e

’

r et ail ers in o u tlyi n g s e ctio n s an d t h e latt er wo u l d b e b ro u ght

,

n o n e ar er t h e s o u r ces o f s u p ply We b eli eve al s o that f o r

.
, , ,

t h e pr es ent at le a s t t h e n um b er o f s u ch m ark ets sh o u ld b e

,

re s tri ct e d t o o n e f or e a ch b or o u gh s o that ea ch m ay b e ,

a ss u r ed o f a s l ar ge a s u pp ly a s p o ss i b l e a n d m ay a ttr act as
l arge a nu m b er o f b u yers a s po ss ib le .

The s e wh ol e s al e t erm i n al m arket s sho u ld b e what their

nam e i m pli e s m arket s o n t h e t erm i nal s o f as m an y trans it
—

lin e s as p o ss ib l e s o tha t th ey will b e s u p pli e d with a f u ll

,

range o f co mm o diti es They s ho u l d b e u ni o n fr ei ght t er

.

m in als with m o d ern m ark eti n g f a ciliti e s N o o n e r a ilro ad .

b ri n gs a gr e at e n o u gh v ari ety o f pro d u ct s t o s u p ply a m ark et

with all li n e s They sh o u l d h av e s u ffi ci en t s p ace f or h and li n g
.

car s f ro m d i ff er ent li n e s wi th d i s pa t ch R efrigeratio n sho u l d .

b e pr o vi d e d fo r b o th t em p or ar y an d l o n g s t orage an d ther e ,

sh ou l d b e r efri gerat ed ro om s int o whi ch r efrigerat e d car s

co u l d d i s ch a r ge th e ir c o n t en t s with o u t ch an ge o f t e m p er a
t u r e an d co n s e q u en t i n j u ry t o t h e go o d s T h e h an dling o f .

pro d u c e s h o u l d b e b y m achin ery a s f ar a s p o ss ib l e S e p ar at e .

p art s o f t h e m ar k et s s ho u l d b e d evo t e d t o t h e s al e o f d iff er ent

pr o d u cts b u t t h e m ark et sh o u ld b e s o a rranged th a t a
,

d e aler c o u l d b u y hi s v ari o u s s u p pli es with o u t go ing t o o f ar .

C on ne ct e d with e a ch m ar k et s h o u l d b e a p o s t o ffi ce b an k , ,

t el egra ph O ffi ce p u b li c t el epho n e r e st au rant infir m ar y a n d

, , , ,

c om f ort s t a ti o n O f co u r s e m any d et ail s m u s t b e l eft f o r

.
,
 WH OL E SAL E TRA D E 1 27

f u t u re e l ab ora ti o n , b u t it i s prob abl e th at e co nom y will b e

e ff e ct ed b y h a vi n g a d e li v ery s ervi c e b y a u t o m o b il e tr u ck s
b elo ngi n g t o t h e m arket E a ch m arket s ho u l d a l s o h ave a
.

r et ail d e p art m ent a n d a cann i n g a n d pr es ervi n g p lan t .

A pro m in ent f e at u r e o f n e arly a ll fo r ei gn m u ni ci pa l

whol es al e m ark et s i s t he pr o vi s io n f o r s al es a t a u ctio n O f a ll
goo d s co ns i gn ed d irectly t o t he m a rk et , c o nd u ct e d b y
b o n d e d a u cti o n eer s li cen s ed b y t h e city S u ch s al e s a r e .

n o t pr ovi d e d f o r in an y o f o u r p u b li c m ark et s a t p r e s e n t
ther e ar e n o m ark et s t o whi ch s hi pp er s ca n n o w co ns i gn
d ir e ctly ; they m u s t s e nd go o d s t o i n d ivi d u a l d e al er s T he .

a u cti o n m e tho d i s n o w u s ed h er e in d i s p o s i n g o f C a li fo r n i a
fr u it s a n d s o m e f e w o th er p r o d u ct s a n d h as r e cen tly b ee n
,

i n tr o d u ce d i n t o t h e live po u ltry tr a de .

T h e t er m in a l m ark et s s ho u l d b e s el f s u p p o rting t h e -
,

r ents charged b eing s u ffi ci en t t o pay i n t er e s t o n t h e m o n ey

i n ve s t ed a n d a s ink i n g f u n d a n d t o co v er t h e lo ss o n t he
,

pr o p erty b y e x em p ti o n f r o m t ax ati o n T h e m ark et s s ho u l d

n o t b e o p er at e d wi th t h e p ur p o s e o f m
.

aki n g t h em a s o ur ce

o f r ev en u e t o t h e c ity b u t e v ery e ff ort s h o u l d b e m a d e t o

,

hav e th em o per at ed in s u ch a w ay tha t t h e co st s o f d is tr ib u

ti o n shall b e m i n i m iz ed an d pri ces k ept at nor m a l l evel s .

A s ys t em can n o t h o ld t o get h er o r work f or a d efinit e

p u r po s e u nl es s it i s o r gani z ed a n d it s c o n tro l ve s t e d in a
co m p et e nt e x e cu tiv e b od y T OO m any city d e part m e n t s
.

n o w h av e a u th ority o v er t h e m ark et s Their p owers s h o u l d

.

b e v est ed in o n e D e p art m en t O f M ark et s t o b e cr eat e d b y ,

am en d m ent o f t h e C h art e r T he co ntr o l is n o w s o s plit u p

.

tha t ( 1 ) t h e B o ar d o f Ald er m en h as c h arge o f t h e s ele cti o n

o f sit es ; ( 2) t h e B or o u gh Pr e s i d en t has char ge Of m ai n t e
n a n ce ; ( 3 ) t h e D e part m en t o f Fin an ce co ll ect s t h e r en t s ;
(4 ) t he D e part m ent o f H ealth has c h ar ge o f t h e s an it ar y
co n d iti o n s o f t h e m ark et s a n d t h e i n s p e cti o n o f f o o d ; ( 5)
t h e Fir e D e p art m en t t ak e s m eas u r e s f o r pr ot e cti o n fro m
fir e ; ( 6 ) t h e P o li cy D ep art m e n t m ak e s tr a ffi c r egu l ati o ns ,

et c ;
.
( 7 ) t h e B u r eau o f We i ght s a n d M e as u r es h as it s
a u th o rity ; a n d ( 8 ) t h e D e pa rt m e n t o f D o ck s a n d Fe r r ics
c oll e cts d o ck r e nt s wh e r e m ar k e t s a r e o n t h e wat er fr o n t .

The s e f u n cti o ns s ho u l d b e ce n t ere d in o n e D e pa rt m e n t ,

whi ch Sh o u l d e x er ci s e s u pervi s io n o ver t he e n tir e m arketi n g

s yst em o f t h e city . It sho u l d k e e p a r e co rd o f a ll go o d s
re ceived a n d s o l d at t h e m arket s m a i n ta i n a sys t e m O f
,

i n s pe cti o n o f f oo d st u ff s i ss u e b u lleti ns o f s u p p li e s r e ceive d

,

a n d m ar k e t pri ce s , e s t ab li s h s t a n d ar d r e q u ir e m e nt s f o r

p a ckin g a n d gr ad i n g e t
,
c .

T h e e x ecu tiv e f u n cti o ns o f s u ch a D e part m en t o f M a r

kets sho u l d b e ve st e d in a B o ard o f M a r k e t C o m m i ss i o n er s ,

o n e f r o m e a ch b o r o u g h t o b e a p p o i n t e d b y t h e B o r o u gh
,

Pr es i d ent to s erve fo r a t erm o f year s o r d u rin g go o d

,
1 28 MARK E TIN G PR O BL E M S
b eh avi or s u ch B o ard t o ch o o s e it s o wn chairm an Su ch
,
.

M ark et C om m i ss i o ner s a s well as t h e m arket au cti oneer s

, ,

sh o u l d b e f o r b i d d e n t o h av e a n y p er s o n a l i n t er es t in t h e
b u s i n e ss d o ne in t h e m arket s .

Th ere ar e withi n a r a d i u s o f a f ew h u ndr ed m il e s o f

N ew Y o rk m any s m a ll far m er s o n wh o m pr e s en t c onditi ons
a r e a h e avy b u r d e n . O n th eir f a rm s q u an titi es of f o o d
s t u ff s go t o wa st e e very y ear b e ca u s e t h e co s t O f getti n g
,

th em t o m arket i s t o o great Fr o m s om e pl aces d i st an t f o r

.

p a ss e n g e r s o n ly t w o h o u r s f r o m N e w Y o rk it t ak e s f r o m t en
d ays t o t wo w eek s t o get f r eight h er e . Thi s i s t o o l o n g a
ti m e f or p erishab le p ro d u ct s a n d ther e is n o ad va n t a ge in
s en d i n g by e x pr e ss a s t h e r a t e s a r e t o o hi gh .In m a ny cas es ,

t o o t h e f ar m er d o es n o t kno w a r eli ab l e d ealer t o wh om t o

,

shi p T h e t erm i nal m ark et s with their a u cti on s ale s will

.

o p en t h e way f or th e s e go o d s t o r ea ch t h e c ity . A s s oon as

they a r e in o p era tio n it will b e pos s ib l e f o r t h e r ailro a d s
th at r e ach o u t thro u gh t h e n earb y t errit ory t o r un d aily
p r o d u c e tr a i n s a s th e y n o w r u n m ilk tr a i n s,t o whi c h f a r m er s

m ay t ak e p r o d u ce in a n y q u an titi e s t o b e s o l d in t h e m arket s
at au cti o n o r o th erwi s e a s d e s ir ed
, ,
. Th ey can not d o thi s
n o w a s ther e a r e n o m ean s O f d i s p o s i n g o f t h e go o d s wh en
they r e a ch t h e city u nl e s s th ey a r e c on s i gn e d t o d eal er s
,
.

Yo u r C om m i ss i o n h as prepared p la n s fo r s u ch a m arket
a s ha s b e en d e s cri b ed t o b e co n s tr u ct ed in t h e B o r o u gh o f
T h e Bro nx b as ed o n c ar ef u lly c o m p u t e d esti m at e s o f pr es ent
,

a n d f u t u r e c o n s u m pti o n in t h e t e rrit o ry s u ch a m arke t will

s e rve .This m arket will c o ver 28 a cre s an d will co st with ,

t h e la n d in t h e n eighb o rho o d o f
,
At a n average
a n n u a l r e nt a l o f 35 c e nts p er sq u a re f o o t o f re nt a b l e s p a ce it ,

will r et u rn s eve n p er cen t o n t h e inve s t m en t m or e than —

s u ffi ci en t t o p ay all t h e ch arge s o f t h e u nd ert ak i n g . R en t al

rat es in pr e s ent p u b li c a n d privat e m arket s a r e m u ch higher
a n d t h e f a ciliti e s o ff e r e d m u ch l e ss . T h e p l an s i n cl u d e a
fr ei ght yar d with a m p le u n l o a d i n g pl at fo r m s ; b r o ad d rive
ways f o r tr u ck s s o a rr a n ge d that inco m i n g a n d o u tgo i n g
,

tr affi c will n o t c o nfli ct ; s e lling a n d s t o r a ge s p a ce ; a u cti o n

ro o m s ; powe r ho u s e ; re tail m arket ; an d a m ple wat e rf ront
f a cili ti e s .

D is cu ss this p l a n fr om th e st a n dp o int o f W e ath er

h ead C om pa ny a M a ryl a n d fir m th a t shi p s fr esh
,

t om at o es t o N ew Y o rk an d o th e r m ar k ets in car l o ts .
 WH OL E SAL E TRA D E 1 29

’
97 . C A L I FO R N I A FR U I T G R O W E R S A S S O CI AT I O N
A P P L I CA B I L I T Y OF P LAN To A P P LE G R O WI N G IN

N E W E N G LAN D
T he C alif o rni a G r o w e rs E x cha n ge is a
’
Fru it
coo p e ra tiv e a ss o ci a ti o n o r ga ni z ed in 1 9 05 a s a n exp a n

si o n o f s m a ll e r a ss o ci a ti o ns o f s im il ar ch ara ct e r This .

e x ch a n ge is a f e d e r a ti o n thr o u gh d istri ct e x cha n ge s O f

l o ca l r tive fr u it gr o w ers a ss o ci a ti o ns
co op e a
’
.

Som e o f th e m a in p o ints in t h e o rga ni z a ti o n o f t h e

e x ch an ge a r e in d i ca t ed by th e f o ll o win g qu o t a ti o n :l

T h e gen er al p ur po s e f o r whi ch t he E x ch an ge is i ns ti
t u t ed is t o f u r n ish t h e f a ciliti e s an d a gen ci e s thro u gh whi ch
th e citr u s f r u it s a n d the ir b y pro d u ct s O f it s m e m b ers a n d
-

gr owers r e pr es ent e d by th em m ay b e m ark et ed a n d d is

trib u t ed u pon a u ni form plan a n d in s u ch m ann er as t o
b ring ab o u t a s t an d ar d o f q u ality , a m o r e u n i fo r m d is t r i
b ut io n a n d a l arger co ns u m pti o n th er eo f in t h e m ark et s O f
t h e Uni t ed St at e s a n d in o th er p l a ces In or d er t o m ak e
.

s u ch faciliti e s an d agen ci e s avail ab l e t o t h e gr ower , t h e pl an

o f t h e E x ch a n ge in cl u d e s t h e o r ga n iz ati o n O f t h e gr owe r s
“ ”
into Lo cal As s o ci atio ns a n d t h e a ffili ati on o f th o s e lo ca l
“ ”
as s o ci ati o n s int o D i stri ct E x ch an ge s .

This E x ch an ge will h ave a s m an y m em b er s a s ther e ar e

D i s tri ct E x ch ange s u n d er co ntr a ct , a s s u ch , wit h thi s
E x cha nge E a ch D istri ct E x ch an ge will no m in at e s o m e
.

p e r s on t o a ct f o r it a s its m em b er in thi s E x ch an ge T hi s .

E x ch an ge will h ave a s m any d ir ect ors a s it h as D i s tri ct

E x cha nge m em b er s , s o th a t e ach m em b er th u s n om ina t e d
b y t he D i s tri ct E x ch ange will a l s o b e a d ir ect o r o f thi s
E x ch a n ge .

E a ch D i s tri ct E x ch an ge m ay a t will , a n d a s o ft en a s it
d es ir es , ch a nge it s m e m b e r r e pr e s en t ative in thi s E x cha n ge .

Upon t h e certifi cati o n o f a n e w r e pr e s en t ative t o t he B o ard

o f d ir e ct o r s o f this E x ch a n ge , t h e m e m b e r s hi p o f t h e f o r m e r
r e pr e s ent ative O f s u ch Di s tri ct E x cha n ge s ha l l ab s o l u t ely
c e a s e a n d t er m inat e Su ch n e w r e pr e s ent ativ e sha ll th er e
.

A rticle s of I ncor p or atio n a nd By La ws of Ca lif o rn ia Fr u i t Gr ower s

’
1 -

E xcha n ge, Ar t icle XI I , pp 1 1 - 1 2 . O t he r r e fe r e nc e s o n c oo pe r a t iv e

.

m ar k et m g are t h e fo llo wm g G H ar o ld P o we ll, C oope r a ti on i n A gr i

.

c u lt u r e F W P o we ll, C oo r a t iv e M a r k e t in g o f C ali fo r ni a fi es h
“
. . .

Q ua r ter’ l Jou rna l of cono m ics , Feb r u a r y , 19 1 0 C a li fo r m e

”
Fr uit ,
E
.

Fr u it G r ow e rs xch a n ge , A n n ua l Re po rts B H HI b b ar d , Agr ic ul

. . .

t ur al C oo pe r a t io n , A gri cultu r a l E x per i me n t S ta tio n of the U n i ver s i of

Wi scon s i n , B ulle ti n 2 3 8 O B Jes n es s a n d W H h e rr , C O O pe r a t 1v e
. . .
‘
. .

P ur c h as i n g a n d M ar k et i n g O r ga niz a t io ns a m o n g Far m e rs ,
”
Un ited
S ta te s De pa rtme nt of A gri c u lt u r e , B ulle ti n N o 5 4 7 W H K e rr a n d
. . . .

G A N ahs to ll , C oo pe r a t iv e O r ga n iz a t io n B us in es s Me t hod s , Un i ted

“ ”
. .

S ta tes Depa rtment of A gr i cultu re, B ul leti n N o 1 78 . .

1 30 MARK E TIN G PR OB LE M S
u po n
b e e l ect e d by thi s E x ch a nge as o n e o f it s d ire cto r s in
place o f t h e f o r m er m em b er .

This E x chan ge Sh al l i ss u e a certifi ca t e o f m em b er ship to

each m em b e r , b u t t h e s a i d m em b er s hi p s h all n o t , n or s hall
t h e s ai d certifi cat e th er eo f , b e as s ign e d b y s ai d m em b er t o
a n y o th er per s o n , a n d t h e a ss ign e e th er eo f S h a ll n ot b e
e ntitl ed t o m em b er shi p in t h e E x chan ge o r t o a n y pr o p erty
ri ghts o r int ere s ts th erein n o r shall a pu r cha s er a t e xe cu
,

ti on s ale or an y oth er perso n wh o m ay s u ccee d by o pera

, ,

tio n o f law o r o therwi s e t o t he pro perty i n t ere s ts o f a m em

b er b e entitl ed t o m e m b er shi p or b e co m e a m em b e r o f t h e
,

E x ch an ge b y virt u e of s u ch tra ns f er T he b o ar d o f d ir ce
.

t ors m ay h owev er by m oti o n d u ly a do pt ed b y it co ns ent

, , ,

t o s u ch a ss i gn m en t an d tra ns fe r an d t o t h e a c ce pt an ce o f
t he a ss ignee o r tra ns f er ee as a m em b er o f this E x cha ng e ,

b u t it is e x pr ess ly u n d er s t oo d a n d a gr ee d b e twee n a ll o f
t h e m em b er s tha t n o m e m b er shi p sh all b e trans f err ed o r a n y
m em b er shi p certifi ca t e a ss ign e d u nl e s s wit h t h e c o ns en t O f
t h e bo ar d o f d ir e ct o r s O f this E x cha nge fir s t h ad a n d r e ceiv ed .

H owever wh en a D i s tri ct E x chan ge d e s ir es to chan ge its

,

m em b e r re pr e s ent ativ e in this E x cha nge fr o m on e p er s o n t o

a no th er t h e b o ar d o f d ir e ct o rs O f this E x ch ange s h all r e co g
,

niz e t h e trans fer an d a ss ignm ent of s u ch m em b er shi p a n d

i ss u e a n ew m em b er shi p certifi cat e t o s u ch n ew r epre s ent a
tive T h e m an ner in whi ch th e D istri ct E x chan ge m ay
.

ind i cat e tha t it d e s ires t o cha nge its r epr e s e nt ative a s we ll as

t h e m etho d by whi ch a n y ch an ge o f s u ch r e pr e s ent a tive is
t o b e br o u ght ab o u t s ha ll b e d et erm ined by th e b o ar d O f
,

d ire ct ors of this E xch ange by res ol u ti on e nt ere d u po n its

m inu te s .

N O per so n shall b e a m em b er of this E x change u n l ess h e

a n d t h e D i s tri ct E x cha nge whi ch h e r epr e s en ts m ark et s a ll
o f t h e citr u s f r u its whi ch h e a n d it h a s t o m a rk e t o r d i sp o s e
o f thr o u gh t h e f aci liti e s a n d a gen ci es a ff or d e d by this
E x change a n d if an y m em b er o r D i s tri ct E x cha nge s hall
,

c ea s e f ail n egl e ct o r r ef u s e f o r a n y r ea s on wh at s o ev er to
, ,

m ark e t t h e who l e o f s u ch citr u s f r u it s thr o u gh this E x ch an ge ,

th en in that e ven t t h e m em b er shi p o f s u ch m em ber an d of

s u ch D i s tri ct E x ch a n ge in this E x ch a n ge a n d in its pro p erty
, ,

s h a ll i p s o f a ct o c ea s e a n d t er m i n at e an d t h e m em b er shi p
,

c e rtifi cat e o f s u ch m em b er an d hi s m e m b er s h i p in this

E x ch an ge a n d a ll o f t h e ri ght titl e an d i n t er est o f s u ch

, ,

m em b er an d o f s u ch D i stri ct E x chan ge th er e in sh all b e,

thereb y can celled a n d s u ch m em b er s h a ll n o t n o r s h all s u ch

,

D i s tri ct E x cha n ge b e e n titl ed t o a n y a p pr ai s em ent o r

int ere s t in t h e pro p erty o r goo d wi ll of t h e E x cha n ge .

E ach D i s tri ct E x ch an ge agr e es that it will r equi r e e a ch

o f t h e L o ca l A ss o ci a ti o n s co m p os in g it s m em b e r s h i p t o
e nt e r int o u ni f o r m c on tr act s wi t h it in s u ch m ann er a n d

form as m ay b e pre s crib ed b y th e b o ar d of directors of this

 WH O L E SAL E TRA DE 13 1

E x ch ange, whi ch co ntr a ct s will r eq u ir e e a ch L o ca l As s o ci a

ti o n to m arke t a ll o f t h e citr u s f r u it w hi ch it h as t o m arke t
o r d i s p o s e o f thr o u gh thi s E x cha nge a n d s ai d D i s tri ct
E x cha n ge .

T h e v oting power a n d t h e pro p erty ri ghts a n d int eres ts

o f t h e m em b ers O f this E x ch an ge s h a l l b e e q u a l .

T h e E x cha n ge s hall h ave p ow er f r o m ti m e t o ti m e to

a d m it ad d iti o n a l m em b ers t o its o r ga n i z a ti o n wh en ev er
t h ere shall b e in its O pi n i o n s u ffi ci en t r e as o n t o m ak e a n
a dd iti o n a l D i s tri ct E x ch a n ge a d vi s a b l e , whi ch n e w m e m b e r

( an d t h e D i s tri ct E x chan ge whi ch s u ch m em b er r epr e s ent s )

s ha ll b e e n tit led t o vo t e a n d t o co n trib u t e t o an d sh ar e in
t h e pr o p erty of t h e E x ch an ge with t h e f or m er m e m b er s , in
a cc o r d a n ce with t h e gener a l r u l e h er ei n s t a t e d a n d u po n
s u ch ter m s a s m ay b e pr e s crib ed u po n t h e a d m i ss i o n o f
a n y n ew m em b er , it b e i n g t h e p u r po s e o f thi s E x c h a n ge th a t
its f a ciliti e s b e ava il ab l e a ll ti m e s a n d u p o n e q u al t er m s t o
a ll gr owers o f citr u s f r u it s , pr o vi d e d o n ly th a t s u ch gr ower s
shall ha ve fir s t provi d ed th em s elve s with pro p er l o cal
as s o ci a ti o n a n d d istri ct e x ch a nge f a ciliti es .

T h e m em b e rs of l o ca l a ss o ci a ti o ns a ffili at ed with
th e
th e e x ch a n ge a r e fr u it gr o w e rs E ach l o ca l a ss o ci a ti o n
.
,

whi ch h a s 1 00 o r m o r e m em b e rs a ss em bl es th e fr u it in
,

its p a ckin g h ou s e gr ad e s th e fr u i t p a cks it a n d pr e

, , ,

p a r e s it f o r shi p m e nt S
. o m e o f t h e a ss o c i a ti o ns p i ck

th e fr u it fr om t h e tr ee s a n d s o m e p r u n e a n d f um i ga t e
,

th e tr e e s f or th e ir m em b e rs I t is a c omm o n p ra cti ce
.

f or e a ch o f th e l o ca l a ss o ci ati o ns t o p o o l th e shi p m e nts

o f its m em b e rs t h e fr u it t o b e s o l d with o u t m a int a inin g
,

th e i d e ntity o f th e shi p m e nts o f ea ch in d ivi d u a l gr o w e r ,

th e p r o cee d s fr o m th e s a l e b e in g d ivi d e d p r o r a t a .

Su ch p o o lin g is co mm o nly d o n e o n a m o nthly b a sis .

T h e m em b e rshi p in th e l o ca l a sso ci a ti o ns is v o l u m
t ary an d o nly f or o n e y ea r E v ery shi p p er r es erv e s t h e
.

ri ght to r e gu l a t e a n d co ntr o l his o w n shi pm e nts d e v e l o p ,

his o w n br a n d s a n d u s e his o w n j u d gm e nt a s t o h ow
,

a n d wh e n it sh a ll b e shi p p e d t o whi ch m a rk e ts a n d
, ,

wh a t p ri ce s h e will a cce p t A s a m a tt e r O f f ac t h ow
.
,

e v e r t h e gr o w e r is l a r ge ly infl u e n ce d by t h e a d vi ce O f
,

th e c e ntr a l e x ch a n ge .

T h e l o ca l a ss o c i a ti o ns a r e gr o u p ed int o tw e nty d is
tr ict e x ch a n ge s whi ch a ct as c l e a rin g h o u s e s Th e s e
.

d istri c t e x ch a n ge s k eep r e co r d s o f shi p m e nts a n d d es

tin at ion s a n d O bt a in thr ou gh th e ce ntr a l e x ch a n ge
1 32 MARK E TIN G PRO BL E M S
r ep o rts co n cerning m ark e t c o n d iti o ns Thr ou gh the .

c e ntr a l e x ch a n ge instr u cti o ns a r e iss u e d r e gard in g

p ri c e s a n d d e stin a ti o ns a n d f o r t h e d iv ersi o n o f ca rs

a n d tra ins in tra nsit in o r d e r th a t t h e fru it m ay b e

s e nt t o th e m a rk e ts th a t a r e m o st fa v o ra bl e 1 Alth o u gh .

o nly a s m a ll p er c e nt a ge O f t h e t o t a l S hi p m e nts a re

d iv e rt e d in tr a nsit th es e d iv e rsi o ns p r es erv e th e b a l a n ce

,

o f t h e m a rk e t .

T h e r e ce i p ts fr om s a l e s o f fr u its a r e p a i d by t h e
ce ntr a l e x ch a n ge thr ou gh t h e d istri ct e x ch a n ge s t o t h e

l o ca l e x ch a n ges T h e d istri ct e x ch a n ge s a r e o p e r a t ed
.

o n a n o n —p r o fit p l a n
’
T h e C a lif o rni a Fru it G ro w e rs .

E x ch a n ge o r c e ntr a l e x ch a n ge is a fe d e ra ti o n O f th e s e
, ,

d istri ct e x ch a n ges I n 1 9 1 9 th e n u m b e r o f in d ivi d u a l

.
,

gr o w ers a ffili a t e d with th e e x ch a n ge w as o v e r

I n 1 9 1 8 19 o f t h e t o t a l shi p m e nts O f c itru s
-
,

fr u its fr om C alifo rni a was shipp ed t hr o u gh th e ex ch an ge .

o o
T he foll wi n g d es cr ipt i n o f m e t h ds o f di ve r t in g S hi pm e n ts is
1
o
gi ve n b y F A n dr e ws , R e d c t i n o f Was t e i n M ar k e t i n g, u oYea r B k oo
“ ”
.

of U S D ep a rtmen t of A gri c lt r e, 1 9 1 1 , p p 1 6 5 1 7 6 :
. .
-
“
Wh e n a m em b er
u u .

o u
S hi p pe d a c ar O f p r d ce , h e t ur n e d t h e b ill o f la di n g v e r t t he m an o o
a ge r o f t h e o o
r ga ni z at i n a n d all we d hi m t o dir ect t h e m v em e n t o f o o
t he c ar t m ar k e t o
T h e O b j ec t o f h avi n g o n e ce n tr al a t h ri t y s ele ct
. u o
o
t h e m ar k e ts w as t pr e v e n t s e n di n g a n v e r —s pply t o a n y o n e place o u .

O n r e ce ivi n g t h e b ill o f la di n g, a r e c r d o f t h e car was m a de o n a car d o

o
i n t h e O ffice o f t h e r ga ni z at i n a n d t he ca r d file d i n its pl ace i n a o
d r awe r T hi s d r a we r w as divid e d i n t s e v e r al r w s o f c m par t m en ts ;
. o o o
o
e ach r o w h a d 3 1 c m part m e n ts , a n d t h e r e w as o n e r o w for e ach p ri n
e i p el m ar k e t i n t h e Uni t e d S t a t es T he 3 1 c m p art m e n ts r e pr es e n ted
. o
e ach d ay o f a m n t h Wh e n a car d w as fil e d , its l cat i n w as d et er
o . o o
o
m i n e d b y t h e d est i n at i n n am e d i n t h e b ill o f la di n g a n d b y t he d ay
o o
o f t h e m n t h o n w hi ch t he c n s ign m e n t w as d u e at t h e d est i n a t io n .

o
Fo r i n st a n ce , a c ar l a d o f c h e rr ie s s hi p pe d t o N e w Y r k fr m a poi n t o o
o
i n t he Sa cr am e n t V all ey o n M ay 27t h w ld b e r e pr es e n t e d b y a car d ou
o
file d i n t h e N e w Y r k r o w o f t he d r aw e r a n d i n t he c m p ar t m e n t N O 7 , o .

o
if t h e c ns ignm e n t w ld be d u e i n N e w Y r k o n J n e 7t h ou The o u .

o
a rr a n gem e n t o f t h es e c ar ds S h w e d at a gla n ce t h e i n t e n d e d di s tr ib u
o o o
t i n O f t his ass ciati n s s hi pm e n ts am n g t he differ e n t m ar k ets , a n d
’
o
w he n t oo o
m a n y c ns ignm e n ts o f a giv e n k i n d o f fr i t w er e o n t he w ay u
o ou
t a gi v e n m ar k e t t h e gr pin g t ge t h er o f s ev e r al c ar ds i n o n e b ox o
s er v e d as a w ar n i n g t h at t h e d est ina t i n o f o n e r m r e c ars sh ld b e o o o ou
c h a n ge d o
T h e dr aw e r sh we d nl y s ch f ru it as w as s hi p pe d b y t h e
. o u
o
as s ci at i n o o
N e w s o f t h e r s hi pm e n ts a n d o f t h eir p r b ab le t im e o f
. o
a rr iv al at d est i n at i n w as s e c r e d , t o u
s m e e xt e n t , b y t h e as s ciat i n o o o o .

Whe n it b e cam e k n w n t h at a ce rt ai n m ar k e t w as a b t t r e ce iv e a n
o ou o
o u
v ers p ply o f a gi v e n f r i t , o n e u
r m r e o f t he S hi p pe rs wh o h ad co n o o
o ou
sign e d t t h at m ar k e t w ld be n tifie d b y t he as s ciat i n m an ag er , o o o
o
s t h at t h ey mi gh t se lect a n th er cit y t whi ch t div ert t h eir c ns ign o o o o
m e n ts o
I n c as e t he y s h u ld r e f us e t m ak e s ch a s e lect i n , t he r ules
. o u o
o o
o f t h e as s ciat i n gav e t h e m an ager t he r igh t t o div ert t he Shi pm e n ts
hi ms elf
’
.
 WH O L E SAL E TRA D E 1 33

T h e p r op o rti o n o f fru it shi p p e d thr o u gh thi s ex ch an ge

h a s b ee n in cr ea sin g st ea d ily .

Th e re ar e s e v e r a l si gnifi ca nt r eas o ns fo r th e d e v elo p

m e nt o f thi s c o o p er a tiv e o r ga ni z ati o n I n th e first
.

p l a ce a,
t t h e ti m e t h e m o v e m e nt g a in e d h e a d w a y m o st
r ap i d ly th er e w as d iss atisf acti o n am o n g th e gr o w e rs
,

with th e ir r el ati o ns with b u ye rs comm i ssi o n m er ,

c h a nts a n d o th ers t o wh o m th e ir fr u it w as s o l d Th e ir.

p r o d u c t w a s in cr ea sin g a n d p ri ce s w e r e fa llin g G l u ts
.

fr e qu e ntly o ccu rr e d in t h e m ark ets in whi ch t h e fru it

w as s ol d T h e bl am e f or lo w p ri ces a n d l o ss e s was
.

co mm o nly p l a c e d u p o n th e m i dd l e m e n T h e gr o w e rs
.

f ou n d th a t th ey c ou l d O bt a in l o w e r fr ei ght r a t es fa st er ,

tim e in tr ansit an d l e ss d am age t o th e ir fru it if th ey

,

w e r e in a p o siti o n t o co ntr act with th e r a i lr o ad c om

p a ni cs f o r t h e r e gu l a r shi p m e nt o f tr a in l oa d s T h e .

gr o w ers a ls o h a d b ee n ga inin g e x p eri e n ce in u nit e d

a c ti o n thr ou gh th e ir irri ga ti o n p r o j e cts a n d t h r ou gh

th e n ee d o f c omm o n eff o rt in th e p r o t ecti o n o f th e ir

o r ch a r d s T h e c itr u s fru it gr ow in g in d u stry in
.

C a lif o rni a is s p ec i a liz e d a n d r e q u ir e s l a r ge ca p it a l .

T h e chi e f m ark e ts f or th e C a lif o r ni a c it ru s fr u its a r e

th e c iti e s in th e M i d d l e W e st a n d in th e e as t e rn p a rt
O f t h e Unit e d St a t e s T h e fru it is shi pp e d in tr a in
.

l oa d s o n r egu l a r s ch e du l es Shi pm e nts ar e m a d e d a ily

.

thr ou gh o u t th e y ea r R e fri ge r a t o r ca rs ar e u s ed an d
.
,

p r e
-
c oo lin g st a ti o ns h a v e b ee n e st a b lish e d in o r d e r t o

fa cili t a t e th e p r o p e r r egu l a ti o n O f t em p era t u r e f o r

shi pm e nts T h e c e ntr a l e x ch a n ge acts a s a cl earin g
.

h ou s e fo r a ll th e d istri ct ex ch a n ges I t h as r ep r es e n .

t a t iv e s in a ll th e i m po rt a nt m a rk e ts in t h e c o u ntry
fr o m wh om a d vi ce is c o nst a ntly r eceiv ed r egar d in g
m a rk e t co n d iti o ns an d p ri ces T h e fr u it is s o l d f o r
.

c a sh , a n d p a y m e nt is m a d e t hr ou gh th e ce ntr a l
e x ch a n ge T h e e x ch a n ge a ls o c o ll ects cl a im s fo r
.

d am a ge a n d l o ss in tr a nsit .

T h e C a lifo rni a Fr u it G r o w ers E x ch a n ge h as d ev e l

’

o p e d t h e S u nkist br a n d o f c itr u s fr u its O nly s u ch

.

fru it a s is o f first q u a lit y is p erm itt e d t o b ea r this

br a n d Shi p m e nts th a t a r e n o t u p t o this st an dar d
.

a r e s o l d u nbr a n d e d This is o n e O f t h e chi e f m eans

.
1 34 MARK E TIN G PR OBLE M S
th a t th e ex ch an ge is u sin g for d eve l o p in g t h e d em an d
fo r th e p r o d u c ts o f its m e m b e rs .

T h e e x p e ns e s o f t h e e x ch an ge we r e st a t e d in t h e
a nn u a l r e p o rt O f t h e ge n e r a l m a n a ge r f o r t h e y ea r

c l o sin g A u gu st 3 1 1 9 1 9 a s f o ll o ws :
, ,

T he s al es s ervi ce o f t h e E x cha n ge co s t an average o f

c e n t s p er b ox in 1 9 1 8 1 9 a n d th a t o f t h e D i s tri ct
-
,

E x ch an ge s a ver a ged 0094 c e nt s a b o x m aki ng a t o t al

.
,

a v er a ge co s t f o r t h e E x ch an ge m ark e ti n g s ervi ce o f
c en st per b ox o r, p er c e n t o f t he d eliver e d v al u e In .

a dd iti o n th er e w a s i n ve s t e d in a d v erti s i n g 2 % ce nt s a b o x
,

f o r o r an ge s a n d 4 cents a b ox f o r l e m on s m akin g t h e t ot al
,

s al e s a n d a d v erti s ing e x pen s e p er cen t o f t he d elivere d

val ue of th e fru it D u e to t h e i n crea s ed vol u m e o f b u s ines s
.

hand l ed t h e E x chan ge s elli n g co s t i n cl u d i n g a dverti s i n g i s

, ,

lower than it w as 1 0 year s ago a n d lower than t h e m arketi n g

c os t O f a n y o ther perish abl e fo o d pr o d u ct in A m eri ca .

Wh a t a r e t h e o bst acl es to th e fo rm ati o n o f a si m il a r

o r ga ni z a ti o n a m o n g th e a pp l e gro w e rs O f N ew E n gl a n d ?

How cou l d th e s e O b s t acl es b e o v e r com e ?

98 . C AR O L I N A P O T AT O E X CHAN GE
D is cu ss riti ca lly th e f o ll owin g By L aws
c -
of the
C ar o lin a P o t at o E x ch an ge :

Arti cl e 1 Obj e cts

.

T h e o bj ect s f or whi ch thi s cor porati o n is form ed accor d

in g t o t he a rti cles o f i n co r por ati o n a r e as f o llows :
1 T o a ct a s a gen t f o r its m em b ers a n d o ther s i n m arket
.

in g a ll p r o d u ct s o f N E N orth C aro li n a a n d e l s ewh er e ; a n d

. .

t o b u y an d s e ll s u ch p ro d u ct s b oth fr e s h a n d m an u f a ct ur ed
, .

2 T O e s t ab li s h a n d m a i n t ai n u n i f orm ly hi gh gr ad e s a n d
.

p a ck s o f all pro d u ct s hand l ed b y it a n d t o b u il d u p a r ep u

.

t at ion in a ll m ar k et s f o r go o d s o f t h e hi ghes t q u ality ,

u n i for m ly gr a d ed a n d pr o p erly pa ck ed .
 WH O L E SAL E TRA D E 1 35

3 . T o pu r ch as e s u p pli e s f o r it s m e m b er s wh e n a dvi s ab l e .

4 . T o er e ct , o p er at e a n d m a i n t ain , as o ccas i o n d e m a n d s ,
p l an t s f o r p r o d u cti o n , pr e s e rv a ti o n ,
h a n d li n g a n d s a l e O f

fr e s h a n d m a n u f a ct ur e d pro d u cts .

5 T o s e cu r e t h e gr e at es t go o d t o a ll it s m em b ers a n d t o
.

that e n d t o engage , wh e n warran t e d , in s u ch o t h er wi s e a n d

a dva n t a ge o u s u n d ert a k i n gs as sh a ll in n o w a y i n t er f e r e
wit h it s m ai n b u s i n ess o f m ark eti n g it s m em b er s pr o d u ct s
’
.

Ar ti cl e 2 M em b er shi p .

Se cti o n 1 T h e m e m b er s h i p o f t h e a ss o ci a ti o n s h all b e
.

co nfi n e d a s f ar a s p o ss i b l e t o a ct u a l gr o wers a n d a gri c u lt u ra l
la nd -o wn er s N O o n e s h all b e co m e a m em b er o f t h e
.

e x ch a n ge w h o s e i n t e r e s t s a r e a nt a go ni s ti c to th o s e o f t h e

gr owers .

Se c 2 . . All shar e s
m u s t , b e fo r e i ss u e , b e r e gi s t er ed o n
the b o o k s o f t h e a ss o ci a ti o n , b y b e i n g s u rr e n d e r e d , a n d n e w

o n e s i ss u e d in t h e n a m e o f t h e p u r ch as e r , w h o , by a c ce pt

a n c e t h e r e o f , a gr e e s t o a ll t h e b y l aws an d r u l e s o f t h e
-

as s o ci a ti o n , in cl u d i n g al s o a ll a m en d m e n t s t h a t m a y b e
le gally a d o pt e d , a n d t h er eb y s h all b e co m e a m em b er O f t he
c o m p an y N O sha re s ca n b e tr an s ferr e d u n til a ll cl ai m s O f
.

thi s co m p an y a gains t t h e own er o f s u ch share s h av e b e en p ai d .

Se c 3 I f a n y m em b er O f t h e as s o ci a ti o n d e s ire s t o d is
. .

po s e o i hi s s h are o r sh ar e s , he s h all fi r s t O ff er t o s e ll t h e
s am e t o t h e co m pa n y a t m a r k et val u e ; if t h e co m pa n y
d e clin e to p u r ch a s e , t h e m e m b er m ay fin d a p u r ch a s er
acce pt ab l e t o t h e co m p an y a n d h a v e t h e s a m e tra ns fe rr e d

t o s ai d p ur chas er o n t h e b o o k s o f t h e c o m p a n y in a c co r d
a n c e wi t h t h e r u l e s I f a m e m b e r r e m o ve s f r o m t h e t erri
.

t ory a n d cea s e s t o b e a p atr o n o f t h e as s o ci ati o n a n d e s t ab

li she s a r e s i d en ce el s ewh er e, t he b o ar d o f d ire ct ors s hall
p ur ch as e t h e s h a re o r s h ar e s o wn ed b y t h e s ai d n o n r e s i d ent
-

m em b er Se cti o ns t w o ( 2 ) a n d t hr e e ( 3 ) o f t hi s a r ti cl e s h all
.

b e p ri n t e d o n ea ch a n d e very cert i ficat e o f s t o ck i ss u e d b y

t h e co m p a n y .

Se c 4 N e w m e m b er s m ay b e a d m it t e d b y a m a j o r ity
. .

vo t e O f t h e as s o ci ati o n .

Se c 5 E a ch m em b er s h all b e e n titl e d t o o n e v o t e o n ly
. . .

Se e 6 N O m e m b er s h a ll b e e n titl e d t o o w n m o r e t ha n
. .

t e n p er ce n t o f t he c a p it a l s t o ck .

Se e 7 Any m e m b er w ho d e s ire s t o s pe cu l a t e in b u yi n g
. .

p o t at o e s o r a n y o t h e r p r o d u ct s h a n d l e d b y t h i s e x ch a n ge
m u s t fir s t with dr aw f ro m m e m b er s h i p .

Arti cl e B o ar d o f D ir e ct o r s
3 .

Se cti o n 1 T h e . b o a r d o f d ir e ct o r s s h all co ns i s t o f s ev e n
m e m b e r s pr o vi d e d t hat e a ch l o ca l b ra n ch i s r e pre s e n t e d o n
t he B o ar d .

Se c 2 Th ey s h a ll b e el e ct e d b y
. . an d fro m am o ng the
st o ck h o l d er s at t he a n n u a l m ee ti n g a n d s h a ll s erve u nti l
1 36 MARK E TIN G PR O BL E M S
t h eir s u ccess or s a r e d u ly el e ct ed a n d q u ali fied Of t h e .

d ire ct o r s e l e ct e d u po n co m pl e ti o n O f t h e o rga n i z ati o n t w o

,

s h all s erve o n e y ear t wo t wo ye ar s a n d t h r e e thr e e year s

, , .

T h e r egu l a r t er m O f O ffice o f t h e d ir ect or s S h all b e thr e e

years I f va ca n ci e s o ccu r in t h e b o ard t h e s am e shall b e
.

fill e d by t he r e m aini n g d ire ct o rs u ntil t he n e x t an n u al

e l e cti o n .

I m m e d i at ely a ft er t h e el e cti on o f t h e d ir e ct or s th e newly

e l e ct e d b oar d o f d ir ect o r s s h all m e e t f o r o r ga n iz ati o n a n d
t h e e l e cti o n o f o ffi cer s .

Se c 3 T h e b o a rd o f d ir e ct or s o r e x e cu tive co m m itt ee
. .

a ppo i n t e d by th em sh all h a v e t h e m a na gem ent a n d c o n tr o l

o f t h e b u s i n e s s O f t h e co r p o r ati o n a n d sh a ll e m p l oy s u ch
a ge n t s a s th ey m a y d e em a d vi s ab l e a n d fix t h e r at e o f
c o m p en s ati o n o f a ll O ffi ce r s a n d e m p l o yee s .

Se e 4 T h e b oard o f d ir ect o r s shall a u d it t h e a cco u n t s

. .

o f t h e a ss o ci ati o n a t l ea s t o n ce e v ery qu art er a n d o n ce e v ery

week d u ring shi pping s e as on .

Se c 5 T h e b o a rd o f d ire ct or s shall m eet o n t h e fir s t

. .

Sat u r d ay o f each m o nth an d b e s u b j e ct t o a ca ll f o r s p e ci al

m e etings a t s u ch ti m e s a s t h e pr e s i d ent o r s ecr et a ry m ay
d e em ne ces sary .

Sec 6 A m aj o rity o f th e d ir e ctors sh all co n stit u t e a

. .

qu o r u m o f t h e b o ar d .

Se c 7 N O m em b er o f t h e b o ar d o f d ire cto r s s h a ll b e
. .

a ll o we d t o v o t e o n a n y q u e st i o n in wh i ch h e m ay h a v e a n y
i n t ere s t co nfl i cting with tha t o f t h e ass o ci atio n .

Arti cl e 4 Offi cer s

. .

=1= s s

Se c 7 A g en er al m a nager s h all b e a pp o int ed by t h e

. .

B o ar d o f D ir ector s f o r t h e shi pping s ea s o n , o r lo nger if

ne cess ary He sh all have f u ll charge o f i n s p ecti o n , d is
.

t r ib u t io n an d s al es o f a ll pr o d u ct s ; a n d it s h a ll b e hi s d u ty
t o a tt en d t o a ll c o ll ecti o ns a n d c l a im s a n d p aym en t o f n et
r et u rns to gro wers a n d t o k ee p car ef u l r e co rd s a n d ac cu r at e
a cco u n t s o f a ll tr a n s a cti o n s in hi s d e p artm e nt a n d d u ring
s hi p i n g s e as o n t o t a k e c ar e O f t h e f u n d s o f t h e c o m p a ny,
p
re cei ve an d a pporti o n f u n d s a n d , if nece ss ary , writ e check s
pr o vid e d that d u ri n g t h e fir s t s hi pp i n g s ea s o n a ll che ck s
a ga i n s t t h e E x ch a n ge s a cco u n t s h a ll b e si gn e d b y t h e
’

m an ager an d co u n t er s i gn ed b y t h e ca s hi er o f t h e Fir s t
N a ti ona l B ank of E liz ab eth C ity wher e t h e f un d s o f t h e
E x cha n ge a r e k e pt ; a n d thi s m etho d o f h a vin g ch e ck s
co u nt er s i gn e d by a n o ffi ce r o f t h e b a nk in whi ch t h e e x ch a n ge
is ke epi n g it s f u n d s s hall b e c o n ti n u e d a s l o n g a s ne ce ss ary .

It s h all b e t h e d u ty o f t h e m anager t o k e e p n ea t an d
sys t em ati c r e cord s whi ch s h all a t all tim e s b e o p en t o t h e
ins pecti o n o f t h e B o ard o f D ir e ct or s , A u d itin g C o m m itt ee ,
ofli cer s o r m e m b ers o f t h e e x ch an ge He sh all m ak e r egu l ar
.
 WH OL E SAL E TRA D E 1 37

weekly r eports t o t h e B o ar d o f D ir e ct or s a n d sh all give s u ch

b on d f or t h e f aithf u l p er fo r m an ce o f hi s d u ti e s as t he B o ar d
o f D ir e ct o r s m ay d e em a d vi s a b l e H e s h all e m pl o y wh at
.

e v e r as s i s t an ce m ay b e n e ce ss ary t o p er f o r m t h e d u ti e s o f
h is o ffi ce .

T h e m anager sh al l n ot b e p erm itt ed t o b u y f o r shi pm ent

o r s a l e o n h is o w n a cco u n t a n y O f t h e pr o d u ct s h a nd l e d b y
t h e e x ch a nge , a n d t h e pr o o f o f s u ch s p e cu l ati o n s h a ll b e
d e em ed s u ffi ci en t ca u s e fo r h is r e m o va l f r o m O ffi ce .

Se c 8 T h e O ffi ce s O f Tr e as u r er a n d M a n age r m ay b e
. .

co m b i n e d .

Se c 9 An y d ire ct o r o r O ffi ce r w h o d e sire s t o s pe cu l at e
. .

in b u ying p ot at o e s o r a n y o t h er pro d u ct h a n d led b y t hi s

e x ch a n ge m u s t fir s t r e s i gn hi s p o s iti o n i n t h e e x ch a n ge .

T h e p o s iti o n o f a n y d ir e ct o r o r O ffi cer w h o d o e s b u y s u ch
pro d u ct s o n hi s o w n a cco u n t s h all b e d e cl ar ed v a cant a t
t h e first m eeting o f t h e B o ard o f D ir e ct o rs .

Arti cl e 5 C ap it al St o ck . .

Secti o n 1 T h e a u t h o riz e d ca pit a l s t o ck o f thi s a ss o

.

c ia t io n s h all b e ni n e h u n d r e d ( 9 00) d oll ar s whi ch s h a ll b e

d ivi d ed i n t o 1 80 sh ar e s o f fi v e ( 5) d o ll ar s e a ch whi ch s h a ll ,

b e p a i d in at s u ch ti m e s a n d in s u ch a m o u n ts as t he b o a r d
,

o f d ire ct or s m a y d e t e r m i n e a n d m a y b e p a i d e it h e r in c as h ,

p ro pe rty l ab o r o r s e cu riti e s a s t h e b oard o f d irect o r s m ay

, ,

d et erm in e .

Arti cl e 6 L o cal Br an ch e s
. .

Secti o n 1 L o ca l Bra nch e s m ay b e e s t a b li s h e d wh er ev e r

.

c o n s i s t en t with t h e O b j ect s O f t h e e x c h a n ge E a ch l o cal .

b r a nch m ay el e ct a t l e a s t o n e d irect or t o r e pr e s en t it o n t he
G e ner al B o ar d o f D ire ct or s .

Arti cl e 7 Gra d e s a n d I n s pe cti o n

. .

Se cti on 1 Si n ce o n e o f t h e p r i m a ry o b j e ct s O f t h e
.

e x ch a n ge i s t o e s t a b li s h a n d m ai n t ain o n a ll m ar k et s a r e p u
t at ion f o r hi gh q u a lity a n d c o r r ect gr a d e s o f it s p o t at o e s an d
o th er p r o d u ct s e v ery m e m b er will b e r eq u ir e d t o gr a d e a ll
,

hi s p ro d u ct s O ffer e d fo r s al e t hro u gh t he e x ch an ge s tri ctly

in a c cor d a n ce with t h e gr ad e s a n d s p e ci fica ti o n s a d o pt e d b y
t h e B o ar d o f D ire ct o r s a n d t h e G en e r a l M a n a ger .

Se e 2 In o r d er t o m a i n t ain t h e n e ce ss ary s t a nd ar ds o f
. .

gra d e s a n d p ack s a gen e r a l i ns pe ct o r a n d ass i s t an t a n d l o ca l

,

in s pector s an d agen t s if r equ i r e d s hall b e e m pl o yed b y t he

, ,

ge n era l m an a ge r s u b j ect t o t h e a p pr ova l o f t h e b o ar d o f

d ir ect or s . A lo ca l i n s p ect o r a n d a l o ca l a ge n t s h all b e
e m pl o ye d a t e v ery l o a d i n g p o int wh er e b u s in ess j u s tifi es .

Se c 3 It sh all b e t h e d u ty o f t h e ge n er al i ns pect or t o
. .

s e e th at pr o per a n d u n i f o r m s t an d ar d s O f q u ality a r e m ai n

tain e d in gr a d e an d pa ck o f a ll pr o d u ct s m ar k et e d b y t he
e x ch ange I n t he perfor m a nce o f thi s d u ty he s hall e x er ci s e
.
,
1 38 MARK E TIN G PR O BLE M S
l t s u pervi s i on a n d con tr o l o ve r t he gr a d in g p a cking
co m p e e , ,

in s pe ctio n an d b r and in g o f s u ch pro d u ct s a n d Shall d irect

a n d s u p ervi s e t h e wo r k o f t h e a ss i s t an t i n s p e ct o r s a n d t h e
l o cal ins p ect ors a n d a gen t s He s h all have a u th o r ity t o
.

tran s f er lo ca l i n s p e ct or s wh e n a d vi s ab l e He s h al l have .

a u th ority t o s u s p en d l o cal i ns p e ct o r s wil f u lly a n d p er s i s t

e n tly ne gli gen t o f t h e d u ti e s o f th eir o ffi ce s a n d t o a p p o i n t
t em p orary s u cce ss ors p en d i n g t h e n e x t m eetin g O f t h e b o ard
o f d ir ect o r s He sh all vi s it l o ca l l o a d in g p o i n t s a s o ft en a s
.

p o ss i b l e a n d wh en ever n ece ss ary He sh all r e p ort d aily t o

.

t h e ge n e r a l m a n a ger a n d sh all p erf or m s u ch o ther d u ti e s

as t h e gen er a l m an a ger o r b o a r d o f d ir e ct o r s m a y r eq u ir e .

Se c 4 E a ch l o ca l a ge n t o r i n s pe cto r sh all b e r eq u ir e d
. .

t o m a in t a i n t h e s t an d ar d s o f t h e e x ch an ge a s t o q u ality ,

u nif or m ity a n d p a ck O f go o d s a n d a ll o th er e ss e n ti a l s He .

sha ll s e e th at a ll goo d s l e avi n g his le a d in g p o i n t ar e cor

r e ct ly b r an d e d a n d pl a i n l y m ar k e d with t h e n u m b e r o r
in iti als o f t h e shi p pe r a s well a s t h e br a n d o f t h e e x ch an ge
a n d gr a d e O f t h e pr o d u ct He s h all b e r e qu ir e d t o f u r n i s h
.

t h e ge n er al m a n ager r egu l ar d aily r e po rts b y ph o n e o r

’

wir e o f nam e s o f a ll e x chan ge m em b er s lo a d ing that d ay

a t his p o i n t a s we ll a s t h e e x a ct n u m b e r ki n d a n d q u a lity ,

O f p a ck a ge s l o a d e d by each gr o we r So fa r a s po ssi b l e h e
.

s h a ll k ee p t h e m ana ger i nf orm ed a s t o t h e a m o u n t an d

qu ality O f pro d u ct s a vail ab l e f o r t h e ne x t d ay s a n d f u t ur e ’

shi pm ent s He shall r eceive i n s pe ct pro pe rly br an d a n d

.
, ,

shi p o r r ej ect all e x chan ge pr o d u ct s a t h is po i n t He s hall .

f u rni sh e ach gr owe r a r ece i pt f o r pro d u ct s r e ce ive d f r o m tha t

g r ow e r
. H e sh a ll r e p o rt a n y a n d a ll v i o l a ti o ns b y m e m b ers
o f t h e By L aws a n d r u l e s a n d r e gu l ati o n s o f t h e e x ch a nge
-
.

Se c 5 An y gener al a ss i st an t o r l o ca l i n s p e ct o r o r l o ca l
. .
,

a gen t wh o b u y s o n hi s o wn a c c o u n t f o r s a l e o r s h i p m en t
a n y O f t h e pr o d u ct s h an d l e d b y t h e e x ch an ge sh a ll b e
d i s ch ar ged .

Arti cle 8 Sal e o f Pr o d u ct s

. .

Se cti o n 1 Thi s o r gan i z a ti on s ha ll h av e t h e e x cl u siv e a n d

.

u n q u a li fied p owe r t o m ark e t t h e s e p r o d u ct s O f it s m em b er s

whi ch t he a ss o ci ati o n wa s f o r m ed t o s e ll o r co n s ign pr o ,

v id e d : I f a co m p etit o r r ai s e s t h e pri ce o f f ar m pr o d u cts

a b o v e th a t whi ch t h e a ss o ci a ti o n c a n o b t a in a n y s t o ckh o l d er
m ay b e a u tho riz ed b y t h e m a n a ger t o s ell hi s pro d u ct s
t hr o u gh an o u t s i d e a gen cy pro vid i n g h e pays h is pr op er
pr o p orti o n o f t h e r u n ni n g e x p e n s e s t o t h e a ss o ci a ti o n Th i s .

s u m sh all b e fiv e p er c en t o f t h e v a l u e o f p r o d u ct s s o s o l d
t o a c om peti n g c o n cer n An y m emb er w h o vi o l at e s t h e
.

pr o vi s i ons o f thi s s e cti o n s h a ll f or f eit h is s t o ck an d ri ght s of

m em b er shi p .

Se c 2 T he com m i ss i o n o n all F O B s al e s wh e th er
. . . . .

l o cal o r b y wir e sha ll b e fiv e p er cent O n co n s ign m ent s t he .

 WH O L E SAL E TRA D E
s
u ua l fee i s i o n m er ch a n t s will b e d ed u ct e d fr o m
of c o mm s

t h e gr o s s pri ce Thr ee per cent o f t h e gross pri ce in cl u d ed

.

in t h e a b o ve ch ar ge s hall b e r e f u n d e d to t h e ex ch ange t o
p ay it s e x pens es .

Arti cl e 9 P o oli n g Pri ces .

At t he cl ose o f ea ch d ay s s al e s t h e pri ces of a ll go o d s’

s o l d F O B l oad ing p oi n t a n d o f tho s e t ake n f or t h e

. . .

a c co u nt o f t h e e x ch an ge sh a ll b e av er age d s o th a t ea ch
m e m b er will r e ceive t h e s am e pri ce f o r t h e s am e gr a d e a n d
val u e o f go o d s s ol d that d ay R et ur ns t o m em b ers sh all .

b e m ad e d aily .

Ar ti cl e 1 0 A ppo rti onm ent o f E arn i n gs

.

Se cti o n 1 T he d ire ct o r s s u b j e ct t o r e vi s i o n s b y t he
.
,

a ss o ci a ti o n a t a n y ge n e r a l o r s p e c i a l m ee ti n g s h a ll a pp o rti o n ,

t h e e ar n ings by fir s t p aying d ivi d en d s on t he p ai d u p ca p it al -

st o ck n o t e x ceed i n g s i x per ce n t p er a n n u m Then th ey .

sho ul d s et a s i d e n ot l e ss tha n t en p er cent o f t he n et pro fit s

f or a r e s erve f u n d u ntil a n a m o u nt h as a ccu m u l at e d in
s ai d r e s erve f u n d e qu a l t o thirty per ce n t o f t h e pai d u p -

ca pit a l s t o ck Then t he r em a in d er O f s ai d n et profits s h o u l d

.

b e d i s tri b u t ed b y u ni fo rm d ivi d en d u po n t h e a m o u nt o f
p u r ch as e s m a d e b y s ha r eh ol d ers a n d u p o n t h e wage s a n d
s al ari es O f e m p l o yee s a n d o n e h al f o f s u ch u n i fo r m d ivi d en d
,
-

s h o u l d b e pai d n o n sh ar eho lde r s o n t h e a m o u n t o f th eir

-

pu r ch ases (Thi s hal f rat e d ivi d end m ay b e cre d it e d t o t h e

-
.

a c co u nt o f s u ch n o n s h a r eh o l d ers o n a c co u nt o f ca pit al s t o ck
-

o f t h e as s o ci ati o n ) .

Se c 2 I n s elli n g a gen ci e s s u ch as fr u it tr u ck p ea n u t
. .
, ,

a n d c o tt o n gr ower s a ss o ci ati ons a n d in pr o d u ctiv e a ss o ci a ,

ti o n s s u ch as cr eam erie s ca n n eri e s war eh ou s e s f act ori e s

, , , ,

a n d t h e lik e d ivi d e n d s s h o u l d b e p r o r a t ed a cco r d i n g t o t h e

r a w m a t e ri a l d eliv e r e d ins t e a d o f o n go o d s p u r ch a s e d In .

c as e t h e as s o ci a ti on is b o th a s e lli n g a n d a pr o d u ctiv e c o n

cern t h e d ivi d en d s m a y b e o n b o th r a w m a t e ri a l d e liv er e d

,

a n d o n go o d s p u r cha s ed b y p atr o n s Pr o vi d e d t h at f o r t he
.

firs t year a ll s ur pl u s pro fit s if ther e b e a n y af t er paym ent ,

O f e x pe ns e s Sh a ll b e s et as i d e fo r a r e s erv e f u nd
,
.
14 0 MARK E TIN G PR OBL E M S
99 . P UB L I C I N T E R E S T IN C O LD ST O R AG E R E G U L ATI O N S
L arge q u antiti e s O f p erish abl e f o o d p r o d u cts a r e
p l a ce d r e gu l a rly in c o l d st o r age T h e c o l d st o r a ge .

p l a nts ar e w a r e h ou s e s in whi ch m e r ch a n d is e is st o r e d
f or a fee T h e p r o p ri et o rs o f c o m m e r ci a l c o l d st o r a ge
.

w a r eh o u s es a r e n o t o wn ers o f th e go o d s st o r ed in th e
w a r eh ou s es So m e o f th e kin d s o f m e r ch a n d is e f o r
.

whi ch co l d st o ra ge is m o st e xt e nsive ly u s e d ar e e ggs ,

b u tt e r ch ee se app l e s m ea t p ou ltry a n d fish

, , , , , .

E ggs Alth o u gh s u bst a nti a l q u a ntiti e s O f e ggs ar e

.

p r o d u ce d in p r a cti ca lly a ll p a rt s o f th e U ni t e d St a t e s ,

t h e l a rge u rb a n m ark ets in th e E ast a n d M i d d l e W e st

r e ce ive a la rge p o rti o n o f th eir su pp ly fr o m th e s u rp l u s
p ro d u cti o n in th e st a t e s o f O hi o I n d i a n a I llin o is , , ,

I o wa M inn e s o t a N ebra sk a K a ns a s M iss ou ri T e xa s

, , , , , ,

T e nn e ss e e a n d K e nt u cky 1 T h e h ea vi est p r o du cin g

,
.

s easo n in th e s e st at es is th e sp rin g m o nths b egin n in g ,

in M a r ch .

E ggs ar e still p rim a rily a b y p r o d u ct o f ge n era l -

farm i n g with th e r e s u lt th a t in th e initi a l st a ge s o f th e

m a rk e tin g p r o cess th e r e fre qu e ntly is l a ck o f p r op er
ca r e 2 .Fa rm ers ge n e ra lly t ak e th e ir e ggs t o m ar k e t
in ci d e nt a lly o n a tri p t o t o wn fo r o th e r pu rp o s e s .

T h e e ggs ar e c o mm o nl y s o l d by t h e fa r m ers to co u ntry

m e r ch a nts s om e t im e s t o p e d d l e rs
,
T h e c ou ntry m er .

c h a nt wh o o p e r a t e s a ge n e ra l m e r ch a n di s e st o r e O ft e n
, ,

tim es t a k e s e ggs in e x ch a n ge f or m er ch a n di s e T h e .

cou ntry m e r ch a nt o r l o ca l p e dd l e r in th e s e m i d d le
, ,

w e st e rn st a t e s u su a ll y s e lls th e e ggs th a t h e h as p ur
ch a s e d t o a p ack e r wh o o p er a t e s a ce ntr a l shi p p in g

p l a nt o r p a cki n g h o u s e T h e p a ck e r m ak e s his s hi p .

m e nts in car l o ts I t is n ow th e u s u a l p ra cti ce f or th e

.

p r o p ri e t o r o f th e ce ntra l shi p p in g p l a nt t o c a n d l e th e
e ggs th a t h e p u r ch a s es in o r d e r t o c l a ss ify th em a cco r d

in g t o q u a lity Af t e r th e e ggs r ea ch t h e c e ntr a l

.

shi pp in g p l a nt th e y a r e k ep t in co l d st o r a ge a n d
,

shi pp e d to o th e r m ark ets in r e fri ger a t o r cars Th e y .

a r e s o l d by t h e p ack e r t o m er ch a nts in th e l a r ge c iti e s ,

1
Uni t e d St at es D e part m e n t o f Agr ic ult ur e , Yea r Book , 1 9 1 0, p 46 2 . .

3 I bid 4 6 6-4
68
.
, pp . .
 WH OL E SAL E TRA D E 14 1

su ch as C hi cago N ew Y o rk a n d B o st o n wh e r e l ar ge
, , ,

qua ntiti es O f th e e ggs a r e p l a ce d in c o l d st o r a ge .

T h e q u a ntity O f e ggs in c o l d st o r age d u rin g th e

s eas o n 19 1 7 1 8 w as as f o ll o ws :1
-

CO LD ST O R A G E H O LDI N G S O F C A S E E GG S IN THE

U N I T E D S T AT E S , 1 9 1 7 18
—

Se p te m be r 1
O cto b er 1
N o v e m b er 1 .

N ov e m b e r 1 5 .

D e ce m b e r 1
Decem b e r 1 5
Jan u ary 1 .

T h e s ea s o n a l ch a n ge s in t h e q u a ntity o f e ggs in
co l d st o r a ge a r e c l ea rly in d i ca t e d by th e s e st a tisti c s .

T h e f o ll o win g st a t em e nts r e ga r d in g t h e r e l a ti o n of

st o ra ge t o p ri ce s a r e q u o t e d fr o m a b u ll e tin of th e
Unit e d St a t e s D ep a rt m e nt o f A gri cu lt u r e : 2

T he avera ge s ellin g pri ce O f s t o ra ge e ggs in 1 9 1 7 1 8 w as -

ce n t s p er d o z e n a n d t h e t o t a l s a l e s v a l u e
Thi s s h ows a gr o ss p ro fit o f ce n t s p e r d o z e n o r

I f a ll owa n ce O f 4 c e n t s p er d o z en i s m a d e as c o v e r i n g s t o ra ge ,

i n s u ra n ce a n d s hri n k a ge fo r t he s ea s o n ( t he figu r e c o m m o n ly
a cc e p t e d in t h e tr a d e ) ther e wo u l d a p p e a r to h a ve b ee n
,

a n e t l o ss o f c en t s p er d o z e n or as i d e f r o m
,

t h e int ere s t o n t h e i n ve s t m e n t .

T he ho l d i n gs o f t h e s e a s o n 19 1 6 1 9 1 7 pr o v e d a ve ry -

pro fit ab l e inve s t m ent T he c a s e s h el d t h a t s eas o n

.

were s t ored a t a n a vera ge pri ce o f c e n t s a t o ta l c o s t ,

C o ld St o r age R e po rts Se as o n 1 9 1 7 19 1 8 U S Depa rt me nt f

“
-
, ,
. . o
A gr ic ult u re B ull t
, N p 20
e in o . . .

2
I bi d , p p 26- 28
. .
14 2 MARK E TIN G PR OBL E M S
of s ol d a t a n a vera ge pri ce o f
an d ce nt s ,

or a gr o ss pr o fit o f ce n t s o r
T h e a ct u al p rofit a ft e r d e d ucti n g 4 c e n t s a d o z e n for s t orage ,

i n s u ran ce s hri n k a ge a m o u n t e d t o
an d , ce n t s a d o z e n ,

or fr o m wh i ch m u s t b e d e d u ct e d t h e i n t er es t
o n t h e i n v e s t m en t t o s e cu r e t h e n et p r o fit .

In t he s e as o n o f 1 9 1 5 1 9 1 6 c a s e s wer e p l a ce d
-
,

in c ol d st o rage a t a n a vera ge pri ce O f c en t s o r a t o t al

cost of They wer e s o ld a t c en t s or ,

with a n a pparen t profit o f c e n t s p er d o z en ,

b u t a n a ct ua l n et l o s s o f ce nts or an d
,

i n t ere s t if a n a ll owan ce o f 4 cents p er d o z en b e m ad e f or

,

s t ora ge ins u ran ce a n d shrinkage

, ,
.

A ccor ding t o t he pri ce s q u o t ed on th e N ew York m ar

k e t if tha t p o rti o n o f t h e p u b li c whi ch p u r ch a s ed t h e co l d
,

s t ora ge e ggs f or t h e s e a s o n h a d u r cha s ed fre s h e ggs i ns t ea d ,

t he ca s e s whi ch th ey o u ght f o r wo u l d
ha ve co s t th em or m o re tha n th ey
p a i d f o r t he s t o r age s t o ck While it i s tru e that m a n y pe o ple
.

co u l d n o t h av e a ff o r d e d t h e f r e sh e ggs a t t h e p ri ce s q u o t e d ,

a n d th a t t h e co n s u m p ti o n wo u l d h av e b ee n r e d u ce d it i s ,

a l s o tr u e t h a t t h e i n cr e as e d d e m a nd o n a c co u n t o f t h e
,

s m all er s u pply a vailab l e ha d there b een n o s t orage s t o ck

, ,

wo u l d n o d o u b t have s en t pri ce s m u ch higher .

It i s a l s o a ppar ent that lacki n g stora ge fa ciliti e s th e

, ,

e ggs t h a t we r e p l a ce d in co l d s t o r a ge wo u l d o th erwi s e h ave

b e en d i s p o s e d o f thr o u gh co n s u m ptive ch ann el s d u ring t he
s ea s on o f pr o d u cti on a n d pr ob ab ly wo u l d h ave cau s ed a
s ub s t an ti al r e d u cti o n in t h e pri ces a t that ti m e Th ere i s .
,

o f co u r s e n o m ea n s o f a s c ert a i n i n g t h e a ct u a l r e d u cti o n t h a t
,

wo u ld ha ve o ccu rr ed b u t it i s pr ob ab l e tha t in m a ny ca s e s
,

t he pri c es wou l d n o t h ave co ve r e d t h e cos t o f pr o d u cti on .

Bu tter 1 As in t h e e gg tr a d e th e l a r ge ur b a n m ar
.
,

k e ts d ra w th e ir s u pp ly o f b u tt e r fr o m th e d a ir y d is
tr i ct s whi ch p r o d u ce a s u rp l u s b e y o n d l o cal n ee d s .

T h e fo ll o win g st a t em e nts a r e q u o t e d fr o m a b u ll e tin

o f t h e Unit e d St a t e s D ep a rt m e nt o f A gri cu lt u r e :
2

A con si derab l e a m ou nt O f b u tt er is p la ced in cold

s t or a ge d u ri n g t h e s e a s o n o f s u r p l u s p r o d u cti on whi ch ,

b egin s ab o u t A pril 1 a n d e xt en d s int o A u gu s t wh en t h e ,

r ecei pt s of fr esh b u tt er o n t h e m arket s ar e l arger tha n t he

r equ ir em e n t s f or t h e consu mi ng tra d e It is a well re cog .
-

A n a n al ysis o f t he r e lat io n o f cold st o r a ge t o p r ices O f b u tt e r an d

1

ch ees e is gi v e n b y E lm a B C arr M o n thly La bor R e i e w Ja n ua r y

.
,
v , ,

1 9 20, p p . 1 00- 1 1 7 .

U S Depa rtmen t of A gri cu ltu re, B ulleti n N o 456 ,

2 . . . Mar k et in g
C ream e ry Bu tt er , pp 28- 30 . .
 WH O L E SAL E TRA D E 14 3

n iz e d f act that s t or age of b u tt er i nece ss ity is an e co n o m c ,

fir s t a s a m e ans o f co n s ervi n g it s q u ality a n d s e co nd as

, , , ,

a f act o r in e q u a lizing t h e pri ce t h r o u gh o u t t h e v a ri o u s

s eas on s o f t h e year T h e b ett er gra d e s o f b u tt er a r e in

.

gr e at e s t d em an d f o r s t or age p u r po s e s M a n y d i s trib u t o r s .

w ho h ave a r egu l ar e s t ab li s h e d tr a d e m a k e a p ra cti ce o f

s t ori n g b u tt er in or d er t o b e as s u re d o f a s u pply d u ri n g t h e
wi n t er s e as o n O ther d ealer s st o r e l ar ge q u antiti e s o f b u tt er
.

a s a s p e cu l a tiv e inv e s t m en t .

T h e pri n ci pal pl a ce s o f s t o ra ge in t h e e a s t er n Un it e d
St at e s a r e C hi cago N e w Y o r k B o st o n P h i la d e lp h i a a n d
, , , ,

O m aha A m o n g o t he r c iti e s at whi ch c o n s i d era b le q u a n ti

.

ti e s a r e s t ore d a r e St P a u l D u lu t h B u ff a lo Pitt s b u rgh

.
, , , ,

St L o u i s K an s a s C ity N e w O rl e a n s a n d N o r fo lk
.
, , O n t he ,
.

P a ci fic co a s t Sa n Fra n ci s co P o rtl an d Se att le Sp o k a n e, , , ,

Sa lt L ake C ity a n d Lo s A n gel e s a r e t he p r i n ci p a l p o i n t s o f

,

s t ora ge Owing t o it s geo gra p hi cal l o cati o n wh i ch perm it s

.
,

e a s y r e s hi p m e n t t o t h e E a s t o r So u t h C h i cago i s t h e gr e a t e s t ,

ce n t er f o r t h e s t or a ge o f b u tt e r O m a h a i s b e co m i n g a l a r g e
.

s t orage c ent e r f o r b u tt er m ad e b y t h e ce n t r alizi n g p l an t s in

t ha t s e cti o n A t em per at u r e o f z ero Fa hren he it o r b el o w
.

u s u ally i s m aint a in e d in b u tt er s t or a ge r o o m s -
.

T h e r at e s f o r s t or age o f b u tt er v a r y in d i ff ere nt c iti e s a n d

with d i ff eren t s t or ages T h e f o ll o w i n g s ch ed u l e i s fo u n d to
.

pr eva il wit h m a n y c o l d s t o r a ge c o m p a n i e s :
-

1 2% c en t s p er h u n d r e dwei gh t p er m o n th f o r l es s
than c ar l ot s .

1 0 c en t s p er h u nd r edwe i ght p er m o n th f o r c a r l o t s .

25 c en ts p er h u n d r e dwe i gh t p er m o n th f o r s m a ll l o t s
s t o re d f or 3 0 d a ys o r l e ss .

T h e cu s t om ary r at e wit h s m a ll s t or age s i s o n e fo u rth O f -

a c e nt p er p o u n d p er m o n th .

Fo rm erly it w a s cu s t o m ary f o r s t or a ge o p er a t or s t o
n e go ti a t e l o an s o n b u tt er t h r o u gh b a n k s b ut n ow m any ,

co l d s t o r a ge h o u s e s h a n d l e t h e l o a n s th e m s e lve s a n d h o ld
-

t h e war eho u se r e cei pt s a s co l lat era l s ecu r ity T he u s u al .

i n t er es t ra t e charge d o n l oan s i s 6 p e r cen t T he ch a r ge s .

f o r i n s u r an ce r a n ge f r om $4 t o per val u ati o n ,

d e pe n d in g u po n t he c o n s tr u cti o n l o cati o n a n d e q u i p m en t , ,

O f t he b u il d in g Th e s e a r e b a s e d u po n a yea r ly peri o d a n d
.

reb at e s a r e m a de wh en t he b u tt e r i s c a r r i e d f o r a s h o r t e r
ti m e T h e am o u n t l o an e d o n b u tt er va r i e s f r o m 60 t o 70
.

p e r ce n t o f it s v a l u e It i s O f
. t e n co n v e ni e n t f o r b u tt e r d is

t r ib u t ors t o d e a l d ir e ctly with a s t o r a ge c o m p a n y in O b t ai n

in g l oan s a n d i n s u ra n ce a n d s t o r a ge c o m pa n i e s a cti n g a s
,

a ge nts in t h e s e line s f a cilit a t e th eir b u s i n e ss a n d fill t h eir

r o om s They can a l s o ha n d le s m al le r a cco u n t s a n d m ake
.

l arger a d va nces a s they h ave t h e b u tt e r in cu s t o dy

,
.

T h e m argin s o n s t o ra ge b u tt e r d e pen d u po n a n u m b e r o f
fa ct o r s s u ch as t he kee pin g q u ality o f the b u tt er t h e m ar
,
.
,
14 4 MARK E TIN G PRO BL E M S
gin al d i fferen ce b etwe en t he pri ce pai d a n d t h e ma rk et val u e
o f t h e b u tt e r wh e n it i s r em ov e d f r o m s to r age t he c o s t s o f ,

s t orage a n d t h e e x pense o f handli n g it It is cu s t om ary t o

,
.

e s ti m at e t h e carryi n g ch ar ge s r o u ghly a t o n e f o u rth c e n t p er -

po u n d pe r m o n th T h e f oll owi n g s ta t em ent ill u s tr at e s t he

.

a p pr o x i m at e c o s t s fo r int er es t st o ra ge a n d i ns u ra n ce : , ,

I n t ere s t o n 100 p o u nd s b u tt er a t 28 c ent s fo r

si x m o nths a t 6 p er cent
St orage o n 1 00 p o u n d s b u tt er at 1 0 cent s p er
hu nd redwei ght per m onth f or s ix m o nth s .

Ins u ra n ce a t ra te o f 4 2 cent s p er 81 00 f or si x
m on ths

C o s t p er 1 00 p o u n d s f o r 6 m o n th s
C o s t per 1 00 p o u nd s pe r m o nth

T heq u a ntity o f cr e am ery b u tt e r h e l d in st o ra ge

d u rin g th e s e a so n 1 9 1 7 18 w a s a s f o ll o ws :1 -

C O LD ST O R A G E H O LD I N G S O F C R E AM E R Y B U TT E R
IN THE UN I T E D ST A T E S , 19 1 7 1 8
—

o
P un ds of B u tt er
In St or age

o o o o o o o o o o o o o o o o o o o o

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

O O O O O O O O O O O O O O O O O O O O

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

De cem ber 1
Jan u ary 1
Feb ru ar y 1
M ar ch 1

Chees e T h e l ar gest ch ee s e p r o d u cin g d istri cts in

th e cou ntry by f ar are Wis co nsin a n d t h e st a t e o f N ew
Y o rk I t is s ai d th a t app r o xi m a t e ly o n e-h a lf th e
.

ch ees e o f th e Unit e d St a t es is m ad e in Wis co nsin 2

.

1 U S Depa rtm ent of Agri cu ltu re, B u lle ti n N o 7 76 ,

. . .
“
C old St or age
R e p o rts , Se as o n 19 1 7- 1 8 , p 8 . .

2 B H H ib b a r d a n d As h u r H obs o n
. . M ar k e t in g a n d Pr ices o f
,
Wisco n s in C hee s e , Agri cu ltu ra l E x peri m ent S ta ti on of the Un i vers ity
”

of Wi sco ns i n , B u lleti n N o 25 1 , p 3 . . .
 WH O L E SAL E TRA D E 14 5

Pra cti ca lly all th e ch ee s e p r o d u ced in Wis co nsin is

m ad e in f a ct o ri e s So m e O f th es e f a ct o ri e s a r e o wn ed .

a n d o p e r a t e d as in d e p e n d e nt b u sin ess u nits O th e rs .

ar e o wn e d a n d o p e r a t e d c o o p e r a tiv e ly by f a r m e rs .

T h e ch e es e is s o l d fr o m t h e f a ct o ry t o l o ca l b u y e rs ,

shi pp ed by th e fa ct o ry o n c o nsi gn m e nt t o l ar ge m e r
ch a nts o r s o l d t o wh o l e s a l e gr o ce rs a n d o th e r m e r ch a nts
,

d ea lin g in ch e es e in c iti es in v a ri o u s p arts o f t h e

cou ntry
1
.

T h e c o l d st o r a ge h o l d in gs O f ch ees e d u rin g th e
s eas o n 1 9 1 7 1 8 w e r e a s f o ll ows : 2 -

CO LD S T O R AG E H O LD I N G S O F C H E E S E IN THE

U N I T E D ST AT E S , 1 9 1 7— 1 8

P ou n ds of C hees e
i n St o r age

0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0

Th es e st a tisti cs a r e n o t f u lly typ i ca l o f a n o rm a l

y ea r b e cau s e th e d e cr ea s e in h o l d in gs d u rin g th e l ast
,

m o nths o f th e s ea s o n w a s n o t as r ap i d as in o r d ina ry
s eas o ns This w as d u e in p ar t a t l ea st t o th e co m
.

p a ra t iv e l y s m a ll e x p o rts O f c h ee s e d u rin g th a t y ea r .

Fr o m t h e st a n d p o int o f p u bli c int e r est wh a t sh ou l d ,

b e th e f u n d a m e nt a l p u r p o s e o f l e gisl a ti o n r estri ctin g

th e ti m e th a t p erish a bl e m e r ch a n d is e m a y b e k e p t in
co l d st o r a ge ?

1 A f u ll d es cr i t io n o f t he m e t h o ds o f m ar k e t i n
p g c h ee se is fo u d n

i n B u ll ti N o 26 1 a d m B u ll ti N
e n . 23 1 O f t h e U iv rs it y o f Wis o ns i
n e n o. n e c n

Agr ic u lt u r a l E x pe ri m e t S t t io n a n .

U S Dep rt m t of Agric ult u r B lle ti n N o 7 76 C o ld St o r age

. . a en e, u .
,

R e po rts Se as o n 1 9 1 7
,
 PART V

ME T HOD S OF M AR K E T I N G M AT E R I A L S ,

E Q U I P M E N T A N D SU P P L I E S FO R
W H O L E SA L E C O N SU M PTI O N

HI S gr ou p of ill u str a t es th e m e th o d s
p r o bl e m s
by whi ch t h e tr a d e in m er ch a n d is e fo r wh o l es a l e
c o ns u m p ti o n is c a rri e d o n d ir ect s a l e th e —
,

fu n cti o ns o f r aw m at eri a l m er ch a nts o r gan iz ed s p e cu ,

l a ti o n p r obl em s o f fin a n cin g tr a d e in r aw m at eri a ls

, ,

a u cti o n syst em s th e s e rvi ce s O f m i dd l e m e n i n t h e

,

tra d e i n s em i m a nu f a ct u r ed m a t eri a ls th e l eas e syst e m

-
, ,

an d o th e r m eth o d s o f s e llin g e q u i p m e nt .

1 00 . H AW K -
E YE C OA L C OM PAN Y —
R E LA T I O N TO

JO B B E R s

T he H awk E ye C o a l C o m pa ny o p e rat e s m ine s f or

-

th e p r o d u cti o n O f bit u m in ou s c o a l in E ast ern O hi o .

T h e m i n e s O f this co m p a ny h a v e a ca p a city O f
t o n s a d a y Th e ir p r o d u c t is p ri m arily st ea m co a l
.
,

a lth o u gh it a ls o fi n d s a go o d m a rk e t a s d o m e sti c c o a l

wh en pro p rly p r epa r e

e d 1 T h e p r e pa ra ti o n co a l O f
.

c o n sists i n r em o vin g f o r e i gn m att e r a n d s o rtin g a cc o r d

in g t o si z e . T h e H awk E ye C o m p a ny is e q u i pp e d
-

with m o d e rn cl e a nin g a n d s cr ee nin g m a chin e ry .

Th e r e ar e wi d e d iff e r e n ce s in t h e q u a lity o f c oa l
fro m d iff e r e nt m in e s T h e f o ll o win g st a t em e nts w er e
.

1 Th e a v e r a e a n u al
g n p r o d u c t io n o f b it u m i ous c o al in t he U it e d
n n

S t a t es 1 9 1 3 1 7 w a s
-
t o ns T he a ve r age a n u al p r o d u ct io n
. n

o f a n t h r acit e co al is a b ou t t o ns An t hr acit e c o al is us ed
.

c hie fl y f o r d o m es t ic p ur p o s es a n d fi n ds its m ar k e t l ar ge ly in t h e n o rt h
e as t e r n p art o f t he U m t e d S t a t e s E ls e wh e r e it is n o t a s e r io us c o m
.

pe t it o r o f b it um i ous c o al
n Bit um i ous c o al is pr o d u ce d i
. n a bo u t n

o n e h alf t he st at es i n t h e Un io n
- Four fif t hs o f t he t o t l h o we v e r
.
-
a , ,

is m i n e d i n P e n ns ylv a ni a O hio West V ir gi i a a d I llin o is

, ,
n T he r e
,
n .

h as bee n a lar e i n cr e as e i n ou t p u t O f b it u m n ou s c o ] t he p r o d u ct io n
i s ,

h avi g m o re t a n d o uble d 1n t he Uni t ed St at es d uri ng t he last t we n t y

n
14 8 MARK E TIN G PR OBL E M S
m ade in a R ep o rt O f the B o st o n C h am b er of C o m m er ce ,

N o v em b er 1 9 09 1 : ,

O f t h e m any i n d ustri e s th at d e p en d u po n co al , each h as

ce rt ai n r e q u ir e m en t s wh i ch c a n b e s t b e m et b y t h e u s e O f
a co a l with s p e ci a l ch ar act eri s ti cs Fo r ins t an ce , t h e m aki n g
.

o f c o k e , t h e m an u fa ct u r e o f ga s , a n d t h e b u r n i n g o f ce m e nt
ea ch d e m an d s a c o al with s p e ci a l q u aliti e s Any c o al m ay .

b e u s ed f o r t h e gen er ati o n o f s t eam , b u t t h e d i ff er en ce s i n

ch ar a ct er a n d q u ality m ak e s o m e k in ds p r efer abl e t o o th ers .

So m e c o al s m ak e m o r e s m ok e tha n o th ers u n d e r t h e s am e
co n d iti o n s ; s o m e ki n d s a r e f a s t er b u r n i n g th a n o th er s ,

m aking th e m d e s ir ab l e f o r a fl u ct u ati n g l o ad a n d h eavy

s ervi ce in b oil er pl an t s ; a n d th er e i s a gr eat d i ffer en ce in t h e
tr o u b l e an d l ab o r r e s u lting f r o m a s h an d cli n k ers O f still .

gr eat er i m p ort a n c e i s t h e d i ff er enc e in t he a m o u nt o f st eam

that m ay b e gen er at ed f r o m t h e v ari o u s kind s o f co al .

It i s v ery d e s irab l e t o kn o w b ef o r e p u r chasing co al

wh eth er it i s go in g t o b e s u it ab l e f o r it s int end e d u s e Wh il e .

t h e tr u e t e s t is in it s b u rni ng, y et th er e a r e m eth od s O f

d et er m ini n g its char a ct e r a n d q u ality whi ch give a r eli abl e
ind i cati o n o f wh a t m ay b e e x pe ct e d f r o m it in u s e , a n d it is
po ss i b l e t o go still f u rth er a n d s p e ci f y t h e n at u r e a n d q u ality
o f co a l d e s ir e d a n d d et er m i n e wh e th e r o r n ot s u ch co al h a s
b e e n d e liver e d Pr ob ab ly t h e m o s t pr a cti cable m etho d o f
.

d o i n g thi s is by ch em i cal a n aly s is a n d d et er m inati o n of

h eating val u e .

>l<

T h e gener a l m etho d o f b u yi n g co al o n s p ecifi cati o ns is f or

t he p u rcha s er t o a s k f o r b i d s , t o b e b a s e d u p o n t h e d elivery
o f co a l o f a s p e cifi e d a n alys i s , a ll owi n g c ert ain v a ri ati o ns f o r
t h e B t u a n d t h e va ri o u s con stit u e nt s
.
2
. . I f t h e a nalys i s
.

sh ows var i ati on s from t h e s pe cifi cati o n s , pr emi u m s ar e paid

o r p en alti e s e x a ct e d in p r o p o rti o n t o s u ch v ari ati o n s ab o v e
o r b el o w t h e st an d ar d I n s om e f o r m s O f s p e ci fica ti o ns t h e
.

b i d d er s u b m it s a n a n alys is o f co a l h e p r o p o s e s t o d eliv er ,
a n d t h e a n alys is o f t h e s u cce ss f u l bi d d er is t ak en a s a s t a n d
a r d f o r t h e c o n tr a ct In so m e con tra ct s t h e a dj u s tm en t o f
.

p ri c e is b as e d o n t h e m o i s t u r e ,
v o l a til e , a s h , s u l p h u r an d
B t u , while in o thers onl y t he as h an d B t u a r e
. . . . . .

co n s i d er e d .

D i ff e r e n ce s f ou n d in co a l fr om d iff er e nt m in es
ar e
th at sh o w th e s am e an alysis C o ns e qu e ntly ex p er i .

1 C o m m i tt ee o n Fuel S u
p ply B os t o n C h amb e r O f C o mm er ce The
, ,
B u yi n g a nd Ha n dli n g of S team Coa l pp 1 3 an d 2 1 ,
. .

2 R t 11 m e a ns Br it ish t h e r m al u i t
. . A Bri t is h t h e rm al u nit is
n .

t h e q u a n t it y o f h eat r e q ui r e d t o r ais e t he te m per a t ur e o f o n e po u n d

of wa t e r one d e gre e Fahr enh eit .
 MATE RIALS AN D E QUI PM E NT 14 9

e n ce c ou nts m o st h ea v ily Wh e n a co ns u m e r h as .

f ou n d co a l th a t is s u it ed t o his n eed s h e s eeks t o O bt a in ,

th e s am e kin d O f co a l fr o m t h e s a m e s o u r ce r e gu l arly .

T h e p r o d u ct O f th e H a wk E ye C o al C o m p a ny is n o t
-

s ol d ext e nsiv e ly o n a n a lysis .

T h e H a wk E ye C o a l C o m p a ny h a s s o l d its p r o d u ct
-

u p t o t h e p r e s e nt ti m e d ir e c t t o r a i lr o a d s a n d thr ou gh

j o bb e rs T h e j o bb er s e cu r e s o r d e rs f o r t h e c o a l H e
. .

tr a ns m its th e s e o r d e rs in his o w n n am e t o t h e co a l
co m p a ny T h e j o bb e r d o e s n o t ca rry a st o ck o f c oa l
. .

H e m a k e s co ll e cti o ns b u t r ece ive s c r e d it fr o m t h e co a l

co m p a ny e q u iv a l e nt t o t h e c r e d it e xt e n d e d t o c u s

t o m er s. T h e j o bb e r kn o ws his cu st o m e rs a n d h as
co nst a nt p e rs o n a l co nt act with th e m T h e co a l f o r .

d o m e sti c u s e is s o l d by th e j o bb ers t o r e t a il e rs w h o ,

d istrib u t e it t o th e in di vi d u a l co ns u m e rs .

Se v e r a l o f th e co m p e tit o rs O f th e H awk E ye C o a l -

C om p a ny s e ll th e ir p r o d u c t d ir e ct o r t h r ou gh s a l es
a ge n ci e s Wh e n a s a l e s a ge n cy is em p l oy e d it h as
.
,

a p e rm a n e nt a rr a n gem e nt with t h e c o a l c o m p a ny a n d

t a k e s th e p l a c e com p l et ely o f th e s al es o r ga niz a ti o n o f

th e c o m p a ny .

T h e p r o d u ct o f th e H awk E ye C o a l C o m p a ny is -

s o l d t o r a ilr o a d s a n d thr o u gh j obb ers t o in d u stri a l

,

co ns u m e rs t o th e l a k e tra d e a n d f o r d om e sti c u s e
, , .

Ab ou t it is e stim at e d is s o l d f o r d istrib u ti o n t o
,

ra ilr o a d s a n d in d u stri a l co ns um ers T h e r a ilr o a d s b u y .

o n c o ntr acts B e cau s e o f t h e v o l u m e o f th e ir b u sin e ss

.

a n d t h e a bs e n c e o f s e a s o n a l fl u ct u a ti o ns in th e ir
d em a n d th e y r ece iv e s o m ewh a t l o w e r p ri ce s th a n
,

o th e r cu st o m e rs T h e tr ad e th a t is O bt a in e d thr o u gh
.

j o bb ers fr o m in d u stri a l c o ns u m ers s u ch a s p u bli c ,

u tili ty c o m p a ni e s st ee l co m p a ni e s a n d m a n u f act u r e rs
, , ,

is n o t s u bj e ct t o s ea s o n a l fl u ct u a ti o n I t d o e s v ary .

fro m ye ar t o y ear h ow e v er a cco r d in g t o b u sin es s

, ,

c o n d iti o n s .

T h e d om esti c trad e a n d th e l a k e tr a d e a r e hi ghly

s eas o n a l in ch a r a ct er T h e l ak e tr a d e is cu t O ff d u rin g
.

th e m o nths wh e n n a vi ga ti o n o n t h e G r ea t L a k e s is
im p o ssibl e T h e d o m esti c tr a d e is a ctiv e o nly d u rin g
.

t h e f all a n d wint e r This s ea s o n a l fl u ct u ati o n pr e

.
 150 MARK E TIN G PR OBL E M S
s ents a s eri ou s p r obl em b eca u s e bit u m in o u s coa l
,

ca nn o t o r d in a rily b e st o r e d in l ar ge q u a ntiti e s Th e r e .

is t o o gr ea t a fir e risk a n d th e st o r age a n d h a n d lin g

c o sts ar e t o o h e a vy t o p e r m it o f st o r a ge in l ar ge v o l u m e .

T h e H a wk E ye C o a l C o m p a ny d esir e s t o in cr e a s e
-

its tr ad e with in d u stri a l co ns u m ers a n d t o in cr e as e its

s al e s f or d o m e sti c u se Sh o u l d it c o ntinu e t o s ell
.

th r ou gh j obb ers or sh o u l d it s ell d ir e ct ?

10 1 . SU GAR BE E T C O N T R A C T S
T h e f o ll o win g st a t em e nt is q u o t e d fr o m a go v ernm ent
r ep o rt p u blish e d in 1 9 1 3 : 1

By far t h e l ar ge s t per cen t age o f s u gar b eet s ar e grown

o n sm all p l o ts a n d t h e pr o d u ct f u rni s h e d t h e s u gar f a ct ory .

In st arting a n ew s u gar fa ct ory it is gener ally cu s t om ary f o r

t h e f act ory t o b u y a n u m b er o f f a r m s t h e a cr ea ge o f whi ch
will f u rni s h f r om o n e thir d t o o n e h alf o f t h e s u pp ly o f b eet s
- -
,

b u t a s t h e c o m pa n y b eco m es O l d er a n d m or e s ettl ed t h e
lan d is O ft en s ol d o ff or r en t e d t o f ar m er s I n C alif orni a t h e
.

indiv i du al p l ots a r e m u ch l arger a n d in co ns eq u ence t h e

,

nu m b er o f gr owers f u rni s hing a s u gar f a ct ory wi th b e ets is

s m all er tha n in pr a cti cally a n y o th er s tat e o u t s i d e of Ut ah .

In C o l orad o a n d in Mi chigan t h e p l ot s ar e s m all r angi n g ,

fr om 5 u p t o 4 0 a cr e s in gen er a l a n d in a f e w ca s e s 1 00 an d o v er .

T h e s u gar c o m pa n y g ener ally m ak e s thr e e t o fiv e y e ar

co ntr acts with t h e f ar m er s t o gr ow b e et s o n a cert a i n n u m b er
o f a cr es e a ch ye ar Thi s co n tra ct b i n d s t h e f arm er t o grow
.

t h e b eets an d t o h av e t h e s u p ervi s i o n o f t h e agri cu lt u ri s t o f

t h e s u gar c o m p an y A f orm o f a gr e em en t of o n e s u gar
.

c o m p a n y i s h er e giv e n .

M em oran d u m o f agr eem en t

grower ,

1 U S D e a rtmen t o A i cult u r e Re ort N o 9 8 S s tem s o M a r

. .
p f g pr , y f .
,

keti n g Fa rm P rod ucts a nd Dema n d f or S u ch P rod u cts a t T rade C en ter s ,

p 1 51
. . See al s o F S H ar r is The S uga r Beet i n A meri ca pp 9 2 102
. .
, ,
.
-
.
 MATE RIAL S AN D E QUI PM E NT 1 51

1 . T h e gr ower a gr ee s t o pl a n t , cu ltivat e , irri gat e , h a r

v es t ,
a n d d e liv e r d u ring t h e s e as o n o f 1 9 1 1 , in c o m p li a n ce
with t h e d ir e cti o n s o f t h e c om p a n y , a s m ay b e giv e n fr o m

l owing d es crib e d l a n d s t o W it qu art er

, , ,

t own s hi p r an ge ,
C O 10 .

2 See d wi ll b e f u r ni s h e d b y t h e c o m pan y a t 1 0 ce nt s
.

per p o u nd n o t l e ss t h a n 20 p o u n d s p er a cr e s h all b e pl a nt e d
, ,

a n d n o n e o th e r s h all b e u s e d .

3 T h e gr ow er a gr ee s t h at all b eet s gr ow n b y h im will b e

.

d eliv er e d t o t h e co m p a n y in t h e f a ct o ry sh e d s o r a b o ar d
,

car s a n d a s or d er e d b y t h e co m p a ny p r o p erly t o p p e d a t t h e
, ,

b as e o f t h e b o tt o m l e af s u b j e ct t o p ro p e r d e d u cti ons f o r
,

tar e fre e fr o m d irt s t o ne s tr as h o r f o rei gn s u b s t a n ce s

, , , ,

li abl e t o i n t er fer e wi th t h e w ork O f t h e f a ct o ry a n d th at he ,

will pr ot e ct t h e b eet s fr o m s u n a n d fr o s t a ft er r em o v a l fr o m
th e gr o u nd T h e c o m p a n y h as t h e o pti o n o f r ej e cti n g a n y
.

d i s eas ed f r o z en o r wi lt ed b eet s b eet s o f l e ss t ha n 1 2 p e r

, , ,

ce nt s u ga r o r l e ss t h a n 80 p er cen t p u rity o r b eet s th a t a r e ,

n ot s u it ab l e f o r t h e m a n u fa ct u r e o f s u gar .

4 B eet s d elive r e d a n d a cce pt e d wil l b e p ai d f or b y t h e

.

co m pa ny a t t h e r at e o f $ 5 p e r t o n f o r b e et s t e s ti n g 1 2 p e r

cent s u gar a n d 3 3 % cent s a d d iti o n al f o r e a ch per ce nt

,

ab o v e 1 2 p er c e nt
1
.

P aym ent t h e 1 5th o f each m o nth for b ee t s d eliv ered

d u ri n g t h e pr evi o u s m o nth .

5 T h e co m p a ny will p ay 50 c e n t s p er t o n a dd iti o na l fo r
.

b eets s il o ed an d d eliver e d ; silo e d b eet s shall n ot b e d eliver ed

e x ce pt u p o n ca ll o f t h e co m p a ny .

6 T h e com p any will p a y t h e fre i ght o n a ll b eet s d eliv er ed

.

by r ailro a d b u t car s m u s t b e l o ad ed t o th eir cap a city

, .

E xt r a charges f or cars lo ad ed l e ss tha n ca p a city will b e

ch ar ge d t o t h e gr ower .

7 T he com p any wi ll giv e t o t h e growe r a t t he f a ct o ry

.
,

The f ollo wi n g st at e m e n t w as p u b lis he d i n Th e Reta i l Grocer s

’
1

Ad voca te , Ja n u ar y 30, 1 9 20 : De nv er Ja n u ar y 27 M e m b e rs
“
.

o f t h e N a t io n al S u gar Bee t G r o w e rs As s o cia t io n , i n c o n v e n t io n h e r e

’

t od a y, v o t e d t o d em a n d m o re m o n e fo r t he ir pr o d u ct A s lidi n g .

s cale“, b as ed o n t he s eab o ar d p ri ces 0 r efi n e d s u gar , w as ad o pt ed .

T he as s o ciat io n v o t e d t o d e m a n d c o n tr ac ts c alh n g fo r pr ices

r a n gi n g fr o m 8 1 2 t o $ 2 1 a t o n , b as ed o n a m i ni m u m O f 9 ce n ts a po u n d
for s u ga r .E a ch a d v a n ce o f 1 ce n t i n s u gar p r1 ces wou ld b r i n g 8 1 50
a d dit io n al a t o n t o t h e gr o w e rs R e fi n e rs h av e O ff e r e d a fl a t c o n tr ac t
.

o f $ 1 2 a t o n , w hi ch t h e gr o w e rs r e j e ct e d E a c h St a t e o r ga ni z a t io n ,
.

h o w ev e r , w as le ft fr ee t o a d o pt a c o m pr o m ise wi t h refi n exs fr o m t he

n a t io n al o r ga ni z a t io n s s che d u le
’
.

“
Wa ges o f far m la b o r i n c ar i n g for t he b ee t cr o p will be ad va n ced
t his s um m er , t he co n v e n tio n a gr ee 1 n g t o a 1 5 pe r ce n t i n creas e T his
i
.

w as s ai d t o m e a n a n i ncre as e c c o s t o f 84 a n a c r e fo r c u lt iv a t io n A .

5 r ce n t o
i n c r e as e i n w ages fo r lab r 1 n t hi n n i n g a n d 1 0 pe r ce n t i n
o
p h n g a n d t p i n g w as a d pt e d o
A pr pos al fo r o
a t o n a bo v e
p
.

o
t he av e r a ge y1e d o f t e n to ns t t he acr e w as r e j e ct ed .
1 52 MARK E TIN G PR O BL E M S
witho u t char ge b eet p u l p n o t e x ce e d i n g 20 p er cent o f t h e
,

wei ght o f t h e b e et s d eliver ed b y him u n d er hi s co n tra ct ,

p r o vi d ing t h e gr o w e r giv e s writt en n o ti ce t o t h e co m p a n y

pr evi o u s t o J u ly 1 o f t h e q u a n tity d e s ir e d ; t h e p u l p t o b e
t ak en b y t h e gr owe r d u ri n g t he ti m e o f s li ci n g as t he ,

co m p a n y m a y d ir ect .

8 An y a d v a n ce s m a d e t o t h e growe r b y t h e co m p any in
.

t h e w ay o f s e e d ca sh l ab or o r o t herwi s e s h all b e c o ns i d e re d
, , ,

a s p art p aym en t f o r t h e c r o p o f b e e t s a n d b e a fir s t li en
ther eo n T h e gro w er agr ee s n o t t o assi gn t hi s co n tra ct
.

witho u t wr itt e n co ns en t o f t h e co m p an y .

9 N o a gent o f t h e co m p a ny is a u t h o riz ed to ch a n ge t h e
.

pr o vi s i ons of this con tra ct .

( s i gnat ur e o f gr ower)

Thi s p arti cu l ar f orm whil e u s e d b y o n e l arge co m pan y

, ,

repr es en ts t h e general form o f co ntra ct of other s u gar

co m p an i e s .

Wh a t d o es th e b ee t s u ga r m a n u fa ct u r e r ga in by
co ntr a c tin g in this w a y f o r a s u pp ly o f b e ets ? Ar e
th er e a n y d is ad va nt a ge s ?

1 02 . RE D WI N G M I LL I N G C O M P A N Y— B U YI N G FR O M

L O C A L E LE V A T O R S
C o rn is th e l a rgest a n d in t h e a ggr e ga t e t h e m o st
v al u abl e a gri cu lt u ra l cr o p in t h e c o u n tr y l T h e a nn u al .

c o rn cr o p is u s u a lly a b o u t b u sh e ls C o rn .

is gro wn in all p a rts o f t h e Uni t e d St a t e s b u t I o w a is ,

t h e ce nt e r o f th e s o ca ll e d co rn b elt t h e r egi o n o f
-
,

G e n e r al r e fe r e ces o n t he gr ai n tr a de : P T D o n dli n ger Book

1
n . .
,

of Whea t R E Sm it h Wh eat Fie lds a nd M a rk ets of the Wo r ld L D H

. . .
,
. . . .

Weld The M a rk eti n g of Fa r m P r oducts A n na ls of the A merican

, .
 MATE RIAL S AN D E QUI PM E NT 1 53

h eavi est p r o du cti o n T h e o th e r st at es in th e co rn b e lt .

a r e I llin o is I n d i a n a O hi o M iss o u ri a n d N ebra sk a

, , , ,
.

A p ecu li a rity o f th e c o rn tr a d e is th a t a b ou t 7 0% o f
th e c o rn is co ns u m e d in t h e co u nti e s wh e r e it is gr o wn .

Th u s a s u bst a nti a l p o rti o n o f th e cr o p d o e s n o t e nt e r

,

int o m o r e th a n p u r ely l o ca l tr a d e ; it is u s e d l o ca lly fo r

th e f ee di n g o f h o gs a n d c a ttl e T h e l a r ge h o g r a isin g .
-

a n d ca ttl e fa tt e nin g d istri cts a r e in th e co rn b e lt

-
.

T h e a n n u a l w h ea t cr O p is u s u a lly in t h e n ei ghb o r
h oo d o f b u sh els a lth ou gh s u bj e ct t o ,

r a th er wi d e fl u ct u a ti o ns T h e chi e f c e nt e r o f wint er .

wh e at p r o d u cti o n i s K ans a s N ebr a sk a M iss o u ri a n d , , ,

I llin o is T h e l ea d in g d istri ct fo r th e p r o d u cti o n o f

.

s p rin g wh e a t is N o rth a n d So u th D ak o t a a n d M inn e ,

s o t a Su bst a nti a l q ua ntiti e s o f b o th s p rin g a n d wint er

.

wh ea t ar e a ls o gr own in s e v e ra l o th e r st at es .

I n th e P a cifi c N o rthw e st in t h e st at e s o f Wa sh ,

in gt o n a n d O r e go n th e r e is a l a r ge p r o d u cti o n o f ,

wh ea t b o th s p rin g a n d wint er T h e wh e a t gr o win g

,
.

d istri c t o f th e P a cifi c N o rthw est is e nt ir ely d istin ct

co m m er ci a lly fr o m t h e wh e a t gr o win g r e gi o ns ea st o f

th e R o cky M o u nt ains ‘
.

I n th e gr a in tr a d e ge n er a lly e l e v a t o rs ar e u s ed for ,

h a n d lin g a n d st o r a ge I n p r a cti ca lly e v ery d istri c t .

wh e r e a s u bst a nti a l q u a ntity o f gr a in is p r o d u ce d o n e ,

A cadem y of P oli ti ca l a nd S oci a l S cie c Se p t e m b e r 1 9 1 1 G G n e, ,

. . .

H u eb n er A gri c u ltu r a l C om m er ce
, G L iv i n gs t o n a d K B Se e ds . . n . .
,
“
M ar k e t i g G r ai n a t C ou tr y P o i ts U S D p rtm en t of Ag i cu ltu r
n n n ,
. . e a r e

B ulleti n N o 6 58 S O D u n
”
. G r ai n H a n d li g i n t h e Uni t e d St t es
. . . n ,
“
n a ,

R a i lwa y A ge Gaz tte Ju e 4 1 1 1 9 09 e C h i c a go Bo ar d o f T r a d e

,
n , , .
,

A nn u al R eports M i ne a p olis C h a m b e r o f C o m m e r ce A u l R po rt
. n ,
nn a e s .

N e w Y o r k P r o d u ce E xc h a n ge A n n u l R epo rts Gra i n Dea ler s Jou rn a l

’
,
a . .

N o rthweste r n M i ller .

1 T he m o e m e n t o f t h e vgr i n gr o w n i n t h e P ac ifi c N o rt h w e st is a

west w a r d t o t he lar ge c it i es o n t he c o as t T h r e t h e gr i is e xp o rt e d . e a n
o r m illed i n t o fl our fo r lo c l c o u m pt o n o r e x po rt T he gr a i e po rt e d
a ns i . n x

f r o m t he P a c ific N o rt h west go es m a i ly t o L v e r poo l Wh n fl o ur is n i . e

e x po rt e d it i s ge ne r a lly s hip p d to t h e O r ie t
, P r io r t o t he w ar t he e n .

e x p o rts o f fl ou r t oo k p lace o ly i ye ars o f lo w pr c s ( A Be r g lu d n n i e . . n ,

T h e Whe a t S it u at io n i n W si n t P ol t
“ ”
l S ci e ce Q t l
f r o m t he P ac ific
a a on, i i ca n ua r e r i ,

Se pt e m b e r 190 9 p p 4 8 9 503 b us t he gr ai n

N o rt h we s t d oe s rio t e t e r i t o d r t c o m pe t t o n i n t he U i t d St t es
. .
, , ”

n n i ec i i n e a

Wi t h gr ain gr o w n e as t o f t h e R o k y M ou t i s c n a n .

O n e o f t he c h ie f pe c u l ar t es o f t h e tr d e in gr a i n i n t he P ac ific
i i i a

N o rt h w es t i s t h at it h as b e e n h a d le d u t il r e ce t ly e t ir ly i s ac k s n n n n e n ,

n o t i n b u lk b y m e n s o f e le t o rs a va .

O n e r e as o n f r t h u e o f s a k s w as t he c u s t o m w h ic h d e e lo pe d
o e s c v

b efo r e t he c ou n tr y w as t h o r ou gh ly o pe ne d b y r ai lr o a d s T he gr i n . a
 MARK E TIN G PR OBL E M S
'

1 54

or m or e gr a in e l e v a t o rs ar e l o ca t e d A t th e p ri m a ry .

m a rk e ts , a t t h e mi lls , a n d a t e x p o rt p o rts th er e a r e
l arge gr a in e l e v at o rs E l ev a t o rs ar e u s ed s o u n iv ers a lly
.

b e cau s e o f th e e co n om y th a t th ey a ff o r d in h a n d lin g
th e p r o d u c t M e ch a ni cal m ea ns , s u ch as tra v elin g
.

b e lts , ar e u s ed f or carryin g th e gra in to th e st or a ge

bins , a n d , wh e n shi pp in g, th e gra in is l o a d e d fr o m th e s e
bins by th e f o r ce o f gra vity T h e am ou nt o f l ab o r th u s .

r e qu ir ed f or h a n d lin g th e gr a in a ft er it o n ce e nt ers a n
e l e v a t o r is s m a ll A n e l eva t o r s erv es as a w a r eh ou s e
.

e ith e r t em p o r a rily o r fo r s e v e r a l m o nths I n th e .

p rim a ry m ark e ts th e t e rm in a l e l e v a t o rs a ls o h a v e f a cili

ti e s f or c le anin g a n d d ryin g th e gra in .

O ccasi o n ally a f arm e r with a l arge cr op o f gr ain

shi p s his cr o p d ir e ctly t o th e p ri ma ry m ark et , e ith er
s ellin g it ou tri ght or shipp in g o n c o nsi gn m e nt This , .

h ow e v er , is u nu s u a l , an d o nly a v e ry sm a ll p er ce nt a ge
o f th e gr a in c r o p is th u s s o l d d ir e ctly in th e p rim a ry

m a rk e t by th e f a rm e rs T h e b u lk o f th e gr a in is s o l d
.

l o cally by th e fa rm ers for cash t o gra in d e a l ers wh o

’
o p e ra t e l o ca l e l e v a t o rs , t o f a rm e rs coo p e r a tiv e e l e v a t o rs

whi ch t ak e th e p l a ce o f in d ep e n d e nt gr ain d eal ers , o r

t o lin e e l e v a t o r com p ani e s O cca si o n a lly s om e gr a in
.

is s o l d t o tr a ck b u y e rs , o r s coop ers as th e y ar e s o m e
tim es c all ed Al th o u gh this h as b ee n o f e n o u gh im
.

p o rt a n ce t o o cc a si o n a tt em p ts a t b o y co tt by th e gr a in
d ea l e rs , th e v o l u m e o f th e cr o p h a n dl ed by tr ack b u y ers
o r s co op e rs is o f littl e si gnifi ca n ce .

t hat was e xport e d was form er ly shi ppe d b y s ailin g v essels whi ch we n t
o
ar u n d t he H r n t o
E r pe o uo
For t h ese v esse ls it w as n ec es sar y t h at
.

t h e gr ai n b e s ack e d t o pr e ve n t shi f t i n g i n r gh w e a t h er Th e tri p ou .

ou o o
th r gh t he tr pics , f urt he rm r e, o v e rh e at ed b ulk gr ain As a r es ul t , .

o u
i ns ur a n ce c m p ani e s r aise d t h e r a t es o n b lk gr ai n t a pr hi bit iv e poin t o o .

Wit hi n r e ce n t ye ars t he b ulk b s in ess h as b eg n t d ev e l p u u o o .

o o
E lev at rs h av e b e e n b ui l t at T a c m a , Seatt le , a n d P rt la n d , a n d s m e o o
cou o
n t r y e lev a t rs h av e b ee n es t abli s h e d T hi s c h a n ge w as c cas i n ed
. o o
u
in par t b y t h e i n c r e as e in pr ice o f j t e s ack s w hi ch s b st a n t iall y e u u
o
h a n ce d t he c st o f h a n dli n g b y t h a t m e t h d Fur t h e r m r e , t h e ppe r o . o o
uo
t u nit y for shi p pi n g t o E r pe b y st e ams hi ps t hr gh t h e P a n am a ou
o o o
C an al h as t e n de d t r e m v e s m e o f t h e ca uses for t h e pr ev i us us e o
0 f s a ck s .

T h e us e o f e lev ators , nev e rt h eless , is st ill r e t ar d ed s m e wh a t b y o

the lar e n um b er o f v a r ie t ies o f wh e a t gr w n i n t hi s di str ict , wh i ch o
ca n n o t i e m i xe d i n tr a n s it o
( H” w ar d T Lewis : T h e E lev a t r M v e
.
“
. o o
o o
m e n t i n t he P a cifi c N r t h west , J u rna l of P li tica l E c n my, O ct b er , o o o o
1 9 1 6 , pp 794 .
 MATE RIAL S AN D E QUIPM E NT 1 55

T h e R ed Win g M illin g C om p a ny in M inn es o t a h as

a l ar ge o u t pu t o f high q u a lity br a n d e d fl o u r
-
whi ch ,

r eq uir es e v e nly gra d ed wh ea t I f t h e co m p a ny d e t e r

.

m in e s t o b u y its gr a in a t c o u ntry p o ints why wi ll it ,

p r o b a bly fi n d it a d v a nt a ge o u s t o b u y fr o m gr a in
e l e v a t o rs r ath e r th a n d ir e ct fr o m f arin ers ?

1 03 . M E TH O DS OF SE LL I N G W H E AT BY C O U N TR Y
D E A LE R S
A cou ntry e l eva t o r u s u ally s ells gr ain by o n e o f
“ ” “ ” “
thr ee m e th od s : o n tra ck t o a rriv e
, or co n ,
”l
si gn ed .

Wh en gr a in is s o l d o n tra ck th e p ri ce is a gr eed ,

up o n b e f o r e shi p m e nt T h e s e ll e r gu a r a nt ee s tha t
.

w ei ght a n d gr a d e l o ad ed int o th e c ar a gr e e with th e

co ntr a ct a n d t h e bill o f s a l e T h e b u y er p ays t h e
.

“ ”
fr e i ght Wh e n gr ain is s o l d t o a rriv e it is a gr e e d
.
,

th a t it is t o b e d e liv er ed within a s p ecifi ed ti m e a t t h e

m ill o r p rim a ry m ar k e t T h e s e ll e r gu a ra nt ees w e i ght
.

a n d gr a d e a t tim e O f d eli v e ry T h e s ell e r p a ys t h e

.

fr ei ght .

Wh e n gr ain is s o l d o n consi gnm ent it is s ent by th e ,

g r a in d e a l e r t o a c o m m issi o n m e r ch a nt a t a p ri m a ry

m a rk e t O n a rriv a l th e gr a in is ins p e c t ed a n d is s o l d
.

by t h e c omm issi o n m er ch ant fo r a c o m m issi o n u s u ally ,

o n e ce nt a b u sh e l T h e r a t e O f c o m m issi o n is d e t e r
.

m in e d by th e ru l e s o f th e l o ca l tr a d e o r ga niz a ti o n o f
whi ch t h e c o m m issi o n m an is a m em b e r T h e co m .

G L ivi n gst o n a n d K B See d s M ar k e t in g G r ain a t Co u n try

‘ “
. . .
,
”
Poin ts , U S Depa rtmen t of A gri cul tu re, B u lleti n N o 6 6 8
. . . .
1 56 MARK E TIN G PR O B LE M S
m issi o n m an co ll e cts p a ym e nt f o r th e gr a in , a n d , a ft e r
d ed u ctin g his co m m issi o n a n d a n y in ci d e nt a l e x p ens e s
th at h a v e a ccr u ed , r em its th e b al a n ce t o th e gr a in
d ea l er. O ft e nti m e s t h e gr a in d e a l e r d r a ws a d r a ft a t
tim e o f shi p m e nt o n th e c o m m issi o n m an t o wh o m th e
car is s e nt , a tt a chin g t h e d r a ft t o a bill o f l a d in g, a n d

ca sh e s this a t th e l o ca l b a nk . Aft er t h e gr a in is s o l d ,
t h e co m m issi o n m an r em its t o th e gr a in d ea l e r th e
b a l a n ce th a t is d u e th e l a tt e r .

A cco r d in g t o an inve sti ga ti o n m a d e by th e U ni t e d

St a t es D ep art m ent o f A gri cu lt u r e in 1 9 1 5, it w a s
r ep o rt ed th a t a pp r o xi m a t ely 50% o f th e gr a in shi pp ed
“ ” “
in th e M i d d l e W e st w as s o l d o n tr a ck , 20% t o
” “
a rriv e , an d 2 1% co nsi gn e d . I n M inn es o t a a n d th e
o th e r gra in st a t e s o f th e N o rthw e st , th e b u lk o f th e
“ ”
shi pm e nts w e r e co nsi gn e d . I n th e st a t e s east o f th e
M ississi pp i , o n th e o th er h a n d , th e r ep o rts in d i ca t e
“ ”
th at o v e r 7 5% o f th e gra in w as s o l d o n tr a ck . T he
“
r em ain d e r w as d ivi d e d ab o u t e qu a lly b etw een t o
” “
a rriv e , an d co nsi gn e d sa l e s I n T e x a s an d O kl a
.

h o m a o v e r 50% was s ai d to b e s o l d t o a rriv e , a n d

“ ”
m o st o f th e r em a in d e r o n tr a ck Th er e w as littl e
.

“ ”
gr ain co nsi gn e d in th es e st a t e s .

Wh at a r e th e r e l ativ e m erits o f e a ch o f th e s e
m eth o d s o f s a l e fr o m t h e st an d p o int o f th e c o u ntry
gr a in d eal er ?

1 04 . LI N E E L E V AT O R C O M P A N I E S
T h e l e a d in g p r im ary m ark ets f o r wh ea t ar e M inn e
a p o li s , D u l u th , K a ns a s C ity , C hi cago , St .L ou is , a n d
h alf a d o z en o th e r l a r ge citi e s in th e M i dd l e W e st For.

co rn a n d o a ts t h e l ea d in g p rim ary m a rk e ts ar e C hi ca go ,

St L ou is , P e o ri a , K an s a s C ity , M inn eap olis , an d

.
 MATE RIALS AN D E QUI PM E NT 1 57

M ilwa u k ee . T h e c o mm issi o n m e r ch a nts t o wh o m ,

g r a in is c o nsi g n e d by c o u ntry e l e v a t o rs a r e l o ca t e d in
,

th es e p r im a ry m ark e ts T h e gr a in th a t th e y r e ce iv e
.

o n c o nsi gnm e nt th e y s e ll t o m ill e rs l o ca l gr a in m e r c h a nts

, ,

a n d e xp o rt gr a in m e r c h a nts .

A s eco n d gr o u p in th e p rim a ry m ark e ts is m ad e u p

O f gr a in m e r ch a nts w h o b u y d i rectly fr o m t h e co u ntry

e l e v a t o rs . A thir d gr o u p is th e lin e e l e v a t o r c om p a ni e s .

I n th e p rim ary m ark e ts lik e C hi ca go a n d M inn eap o lis

, ,

a p o rti o n o f th e e l e v a t o rs a r e kn o wn a s p riva t e e l e v a t o rs

a n d t h e r e m a in d er a s p u b li c e l e v a t o rs A p riva t e
.

e l e v a t o r h a n d l e s o nl y gr a in b o u ght a n d s o l d by t h e

o wn e r o f th e e l e v a t o r . I t u s u a lly h as m a chin e ry f o r
gr a d in g a n d bl e n d in g t h e gr a in A p u bli c e l e va t o r is a
.

p u bli c st o r a g e s p a ce . I t h a s n o m a chi n e ry f o r tr ea tin g

th e gra in a n d it is r e q ui r e d a lw a ys t o k e ep t h e s a m e
,

gra d e o f gr a in in th e s am e bi n s T h e r a t e s O f st o r a ge
.

in a p u bli c e l e va t o r a r e fix ed a n d certifi ca t e s a r e iss u e d

,

t o th e o wn e rs o f t h e gr a in st o r e d in t h e e l e va t o r E a ch .

certifi ca t e ca ll s f o r a d e fi n it e q u a ntity O f a s p e cifi e d

g r a d e o f g r a in . T h e i d e ntity o f in di v i d u a l l o ts is n o t ,

h o w e v e r p r es e rv ed P u bli c e l e va t o rs ar e s u bj e ct to
,
.

p u b li c in p s e ct io n a n d s u p e rvisi o n .

A lin e e l e v at o r c o m p a ny h a s a l ar ge p riva t e e l e v at o r
o r e l e v a t o rs in t h e p ri m a ry m a rk e t a n d o p e r a t e s l o ca l

e l e v a t o rs a t c o u ntry p o ints h a vin g its o w n b u ye rs

,

p u r ch a s e g r a in a t th e s e c o u ntry p o ints f o r shi p m e nt

thro u gh th e ir o w n l o ca l e l e v at o rs to th e t e rm i n a l
e l e v a t o r in t h e p ri m a ry m a rk e t Us u a lly a lin e e le
.

v a t o r c o m p a ny o p e r a t e s o n t h e lin e o f a sin gl e r a i lr o a d

c o m p a ny . T h e P e v e y G r a in C o m p a ny f o r e x a m p l e , ,

o p e r a t es l a r ge ly o n t h e Uni o n P a cifi c a n d t h e R o s e n ,

b au m G r a in C o m p a ny o n th e R o ck I sl a n d .

Wh a t a d va nt a ges a ccr u e t o a lin e e l e va t o r c o m p a ny ?

Wh a t d is a d va nt a ges ?
1 58 MARK E TIN G PR O BLE M S
1 05 . FE D E R A L WH E A T G RA D E S
A t th e t er m in a l m a rk e ts gr a in shipp ed o n c o nsi gn
m ent o r s o l d by gr a d e f o r m e rly was gr a d e d e ith e r by
insp ect o rs a ctin g u n d e r th e ru l e s a n d r e gu l ati o ns o f a
b o a r d o f tr a d e o r by st at e O ffi ci a ls I n I llin o is a n d .

M inn es o t a gr a d in g a t th e t erm i n a l m ark e ts was u n d e r

th e s u p e rvisi o n o f st a t e o ffi ci a ls T h e ins p e ct o r o r .

s am ple r t o o k a s am p l e fr o m e a ch car whi ch w a s ,

p r e s e rv e d f o r f u t u r e r e f e r e n ce in c a s e o f a p p e a l fr o m
th e d e cisi o n a s t o gr a d e m a d e by th e ins p e ct o r This .

syst em o f gra d in g sti ll o bt a ins f o r lo ca l shi pm ents o f

g r a in o ri,gi n a tin g within t h e st a t e in w hi c h t h e t e rm i n a l

m ark e t is l o ca t e d .

G r a d in g o f int erst a t e ship m ents o f gr a in h o w e v e r , ,

is n e w s u bj e ct t o f e d er a l l e gisl a ti o n T h e G r a in .

St a n d ar d s Act w as p ass ed by C o n gr ess in 1 9 1 6 Ao .

c o r d in g t o this a ct t h e Se cr e t a ry o f A gri cu lt u r e w a s

au th o riz ed t o e st ablish O ffi ci a l gr a in st a n d ar d s f o r c o rn

wh eat r ye o a ts , b a rl e y flax s eed a n d s u ch o th er

, , , ,

g r a ins as h e m i g ht d e c i d e u p o n T h e a ct p r o vi d ed th a t
.

gr a in s o l d o r shi p p e d in int e rst a t e or f o r e ign c omm e r ce

by gr a de m u st b e ins p ect e d a n d gr a d ed by a Uni t e d
St at es li ce ns e d insp e ct o r G r a in can b e s o l d by
.

sam p le or typ e with o u t o ffi ci a l gr a d in g Pr o visi o n w as .

m a d e th a t in his d is cr e ti o n t h e Secr e ta ry o f A gri cu lt ur e

m i ght li ce ns e st a t e insp e ct o rs a ls o as f e d er a l insp e ct o rs .

Fe d e r a l gr a d e s h a v e b ee n e st ablish ed f o r gr a in
in a cco r d a n ce with this a ct T h e f o ll o win g st a t em e nt .

is q u o t ed fr o m a b u ll e tin O f th e Unit e d St a t es D ep a rt
i
m e nt O f Agr cu tu e z l r l

Whe n a farm er hau l s hi s wheat to a s t ati on in hi s o w n

s t a t e a n d s ells it t o t h e l o cal e l evat or a ltho u gh it i s b ou ght ,

a n d p a i d f o r by gra d e h e is m ak i n g a tra ns a cti o n wh i ch

,

d o e s n ot r e q u ir e an int er st at e shi pm en t T h e gr a d e in th e s e .

c a s e s i s u s u a lly p l a ce d u p o n t h e wh e a t b y t h e e l ev a to r m an

a ger . It i s n ot t h e n gra d e d b y a li c ens ed i ns p e ct or b e cau s e

t h e ins p ect or s a r e s el d o m l o cat ed a t co u ntry p o int s Th i s .

f e a t u r e i s u n f ort u nat e b u t t h e v o l u m e o f i ns p ecti o n work a t

,

a n y o n e co u n try s hi p p i n g p o int i s h a rd ly e v er l ar ge e n o u gh

1
U S Dep a rtme t of A gri c ultu re B u r a u of M a r kets S er vice a nd
. . n , e ,

R egu l to ry A
a ou nc em e ts N o 6 4” Ho w H ard R e d Win t er Wh eat I s
nn n .
,
“

G r a di n g u d e r F d e r l St a d ar d s
n e a p 2 n ,
. .
 MATE RIAL S AN D E QUIPM E NT 1 59

o r co nti n u e s o ver a s u ffi ci en tly l o ng p eri o d o f ti m e t o w a r

ra nt i n s pect or s in t ak i n g u p wo r k a t s u ch p o int s T h ere .

f ore t h e c orr e ct grad i n g o f w h ea t a t co u n try p o int s i s u s u ally

,

a m a tt er b e twe e n t h e f ar m e r a n d t h e l o ca l b u y er a n d i s o n e
with whi ch l o cal a u th oriti e s a n d n o t t he D e par t m e nt o f
A gri cu lt u re c an d eal .

Unl e s s this wheat i s gro u n d a t a l o ca l m ill in m o s t ca s e s ,

it i s fi n a lly s hi p p e d t o a t e r m i n al m a r k et w h e r e it i s gr a d e d
,

by a d i s i n t ere s t e d ins p ect o r w h o i s li ce n s e d b y t h e D e part

m ent o f A gri cu lt u re a n d in d e ci d i n g t h e gr a d e o f t h e w h ea t
,

he u s e s t h e gra d e s e st a b li s h e d b y t h e Un it e d St at e s
D ep art m en t o f A gri cu lt u r e t he Fe d e r a l wh e a t gr a d e s
—
.

Wh at is th e si gnifi ca n ce O f th e G r a in St a n d a r d s A c t
fr o m th e st a n d p o int :
( a) O f R u d o l p h J o hns o n a f a r m e r r a isin g wh e a t o n
,

a m e d i u m siz e f a r m in -
N o rth D a k o t a ?

( )
b O f E ri c Wils o n a l o c a l g r a in d e a
,
l e r ?

( 0 ) O f th e P il gri m Fl o u r M ills o p e r atin g a l a r ge ,

p l a nt in M inn e a p o lis ?

( d ) Of th e Pi o n e er M illin g C o m p a ny o p er a tin g ,

l ar ge fl ou r m ills in B u ff a l o ?

1 06 . C H I CAG O B O AR D OF T R A DE C O N T R A C T
O r ga niz e d s p e c u la ti o n in gr a in is co n d u c t e d o n t h e
e x ch a n ge s a t C hi ca go , M inn e a p o lis , N e w Y o rk , D u l u th ,

a n d s e v e r a l o th e r c iti e s i n t h e gr a in g r o win g d istri c t

a n d in t h e B a s t l T h e C hi ca go B o a r d o f Tr a d e is th e
.

p r e d o mi n a nt m a rk e t f o r o r ga ni z e d s p e cu l a ti o n .

H H Br ace , Or ga n i z ed S pec u la tio n

I
. . P T D o n d lin ge r Book of. . .
,

Wheat S S H u e b n e r , T h e Fu n c t io n s o f P r o d u c e E xc h a n ges
“ ”
. . . ,

A n na ls of the A meri ca n A cad e m y of S oc i al a n d P o l l l wa l S ci e nc e Se pt e m ,

b er , 19 1 1 R E Smi t h , Wheat Fi e lds a n d M a r kets of the W r ld

. . .
o .
1 60 MARK E TIN G PROB LE M S
T h e tr a ns a cti o ns in th e f u t u r e s m ark e t o n th e
C hi cago B o ar d o f Tr a d e a r e c a rri ed o n in a c co r d a n ce
with th e r u l es a n d r egu l a ti o ns th a t h a ve b een e st a b
lis h e d t o go v ern s u ch b u sin e ss ‘
.

”
A f u t u r e s c o ntr a c t is m ad e u p o n th e b asis o f th e
s p e cifi ed gr a d e o f gra in T h e c o ntra ct p r o vi d e s f o r
.

d e liv e ry , e ith e r o n t h e b u ye r s d e m a n d o r a t t h e s e ll er s
’ ’

p l ea s u r e within a s p e cifi e d m o nth a t a p ri ce fix e d in

th e c o ntra ct Pr o visi o n is m a d e in th e ru l es , h o w e v e r ,
.

wh e r eby o th er gra d e s m a y b e d e liv er e d o n t h e b a sis

co ntr a c t with a sti p u l at e d a d j u st m e nt in p ri ce T he .

f o ll o win g r u l e go v e rns th e gr a d e s d eliv e ra bl e o n t h e

b a sis co ntr a ct O f th e C hi ca go B oa rd o f T r ad e z 2

On contr a cts f o r gra i n o r flaxs ee d f o r f u t u r e d e live ry t h e

t en d er o f a hi gh er gra d e o f t h e s am e kin d o f gr ain or fl a x
s eed th a n t h e o n e c o n tr a ct e d f or sh a ll b e d e em e d s u ffi ci e nt .

All co n tra cts m ad e f o r Whe a t h er ea ft er , u nl e ss o th erwi s e

“ ”
s p e ci fied , s h all b e u nd er st o o d a s f or C o n tra ct whe a t , a n d
o n s u ch co ntr a ct s , r e q u iri n g d elive ry a ft e r J u n e 3 0, 1 9 1 7 ,
a t e n d er o f N O 1 D ark H ar d Wi n t e r Wh e at , N o 1 H ar d
. .

Wi n t er Wheat , N O 1 Y ell ow H ar d Wint er Wheat , N o 2

. .

D a rk H ar d Wi n t e r Whea t , N O 2 H ar d Wint er Whe at , .

N o 2 Y ell o w H ar d Wi n t e r Wh ea t , N o 1 R e d Wi n t er
. .

Wh e at , N O 2 R e d Wi n t e r Wh e at , N o 1 N orthern Sprin g
. .

Whe a t o r N O 1 V elve t C h aff Whe at ; a n d o n s u ch co n tra ct s ,

.

req u iri n g d elivery a ft er J u ly 3 1 , 1 9 1 7 , a t en d er o f N o 1 .

D ark H ar d Wint e r Wh eat , N o 1 H a r d Wi n t er Whe at , .

N O 1 Y e ll o w H ar d Wint er Wh eat , N o 2 D ar k H ar d Wi n t er
. .

Wh e at , N o 2 H ard Wint er Wheat , N o 2 Y e ll ow H a r d

. .

Wi n t er Wh eat , N o 1 R e d Wint er Wh eat , N o 2 R e d Wint e r

. .

Whea t , N o 1 D ark N orthern Sprin g Wh eat , N O 1 N orth e r n

. .

Sprin g Wh e a t , N O 2 D ark N o rther n Spri n g Wh eat o r N o 2

. .

N o rth ern Sprin g Wheat , in s u ch pro p orti on s a s m ay b e

co nv e ni e nt t o t h e s e ll e r , s u b j ect , h owe ve r , t o t h e p r o vi s i o n s
O f S ecti o n 5 o f R u l e XXI , s h a ll b e d e em e d a v a li d t e n d er .

Wh ea t that i s i n s p e ct e d a s s m u tty, o r tr eat ed b y a n y

o th e r pr o ce ss tha n d r yi n g, s h a ll n o t b e d e liv e r a b l e o n co n tr a ct s .

Al s o o n s u ch co n tra ct s f o r d eliv er y o f whea t o n an d a ft e r

J u ly 1 , 1 9 1 7 , a t en d er o f N o 3 D ark H ar d Wi n t er Wh eat ,
.

N o 3 H ard Wi n t er Wh ea t , N o 3 Y e ll o w H ar d Wi n te r
. .

Whe at , N o 3 R e d Win t er Wh eat , N O 1 H ard Wh it e Wh e at

. .

an d N O 2 H ar d Whit e Wh ea t , a t a d i s co u n t o f fiv e ce n t s
.

T hes e r les
1 u ar e sta t e d in f ull i n t h e A n n ua l R ep or t o f t he C hi cago
o
B ar d o f T r a d e .

C hi ca g
2
o Bo ar d o f Tr ad e , A n n ua l R eport, 1 9 18, p 5 1 , R ul e XXI L
.

o
Sec t i n 3 .
 MATE RIA LS AN D E QUI PM E NT 16 1

per bu shel in s u ch pro porti ons as m ay b e co nve ni e n t t o

,

t he s ell er s u b j e ct h o we ver t o t h e pro vi s i o ns o f Se ct i o n 5

, , ,

o f R u l e XXI s h a ll b e d ee m ed a v a li d t e n d e r ; a n d o n s u ch
,

co ntra ct s f or d e live ry o f Wh eat o n a n d a ft e r A u gu s t 1

, ,

1 9 1 7 a t e n d er o f N O 1 R e d S p r i n g W h e a t a n d N O 2 R e d
, . .

Spring Wh eat wit ho u t d i s co u n t a n d N o 3 D a rk N o r th er n

, ,
.

Spring Wh ea t N O 3 N o rt h e r n Spri n g Wh ea t a n d N o 3
,
. .

R e d S pri n g Whea t at a d i s co u n t o f e i gh t c e n t s p er b u sh el
, ,

in s u ch pr oporti o ns as m ay b e co nve n i e n t t o t h e s ell er s u b ,

j ect howeve r t o t he provi s i o ns of Secti on 5 o f R u l e XXI

, , ,

s hall b e d ee m ed a vali d t en d er .

For d elivery o n a n d a ft er J an u ary 1 19 1 9 a ll c o n tr a ct s , ,

f or corn u n l e ss o t herwi s e s p e ci fie d s h all b e u n d er st o o d a s

, ,
“ ”
f or co ntra ct co rn a n d o n s u ch co n tra ct s a t e n d e r o f t h e
f o ll o wi n g d e s cri b e d gr a d es o f co rn in s u ch pr o p o rti o n s as
m a y b e co nve ni en t t o t h e s ell e r b u t in n o ca s e a n a m o u n t,

le ss than b u sh el s o f a n y o n e gra d e in o n e e l eva t o r ,

s h all b e d e em ed a va li d t en d er a t t h e p r i ce di ff e ren ce s
m e n ti o ne d in t h e f o ll o wi n g s ch ed u l e s u b j e ct howev er t o , , ,

t h e p ro vi s i o ns o f S e cti o n 5 o f R u le XXI :
N o 1 Whit e C o r
.

N O 2 Whit e C o r
. at c e n t p e r b u s h el o v er co ntr a ct

N o 1 Y e ll ow
.
pri ce .

N o 2 Ye llo w
.

N o 1 Mix e d C o rn at co ntra ct p ri ce
}
. .

N O 2 Mi x ed C o r n
.

N o 3 Whit e C orn at t w o c en t s p er b u she l u n d er

}
.

N o 3 Y e ll o w C o rn
. c o ntr a ct p ri ce .

N o 3 Mix ed C orn at
. ce n t s
—
p e r b u s h el u n d er
co ntr a ct pri c e .

N O 4 White C o rn at 4 % c ent s p er b us h el u n d er
}
.

N O 4 Ye l low C orn
. c o ntr a c t pri ce .

N O 4 Mix ed C o rn a t 5 cen t s p e r b u sh el u nd er co ntra ct

.
— -

pr i ce .

Pro vi d ed that N O 4 C orn o f t h e n e w cr o p can b e d elive r ed

.

o nly d u ri n g t h e m o nths o f N o ve m b er D e c e m b er J a n u a ry , ,

a n d Feb r u ary .

C o ntra ct s co v erin g a n y of t h e co m m o d iti e s d e a lt in

u n d e r t h e pr o vi s i o ns o f t h e r u l e s o f thi s B o ar d f o r f u t u r e
d elivery in s t o r e o r f or s hi p m en t o r t o arrive s h a ll b e
, ,
-
,

d e em e d t o b e f o r t h e q u a lity o r s t a n d a r d o f gr a d e a s d efine d
in t h e r u l e s o f t h e Illi n o i s St at e G r a i n I ns pe c ti o n D e p a rt
m en t a n d an y ch an ge in a n y s u c h s t an d ar d o f gra d e s a n d
,

in t he r u l es o f t h e Il lino is St at e G ra i n I n s pecti o n D e pa r t
m ent d efin i n g t h e m s h all b e h e l d as n o t a ff e cti n g in a n y
,

w ay what s oeve r t h e v ali d ity o f a n y s u ch co n tr a ct s pe n d i n g

a t ti m e s u c h ch a n ge i s m ad e a n d c o mm o d iti e s O ffi ci a lly
,

g r a d e d u n d e r t h e p r o vi s i o n o f r u l e s in f o r ce a t ti m e of

d elivery sha ll be d eem ed t o b e a va li d t e n d e r o n an y s u ch

con tra ct .
1 62 MARK E TIN G PR O B LE M S
Fo r d elivery o n an d a ft e r J u n e 1 , 1 9 1 8 , a ll co n tr act s f o r
o at s , u n le ss o t h er wi s e s p e ci fie d , s h a ll b e u n d er s t o o d as f o r
”
co n t r a ct o a t s , a n d o n s u ch co n tr a ct s a t e n d er o f t h e
“

f o l lo wi n g d e s cr i b ed gr a d e s o f o a t s , in s u ch pro p orti o n s a s
m a y b e co n v e n i e n t t o t h e s ell er , b u t in n o ca s e a n a m o u n t
l e ss t ha n b u s h el s o f a n y o n e gr a d e in o n e e l eva t o r ,
s h all b e d e e m e d a vali d t en d er ; s u b j e ct , h owever , t o t h e
p r o vi s i o n s o f Se cti o n 5 o f R u l e XXI :
St an d ar d O a t s , a t co n tr a ct pri ce .

N o 3 Whit e O at s , a t 1 % c ent s p er b u she l d i s co u n t

. .

N o 2 Whit e O at s , a t 4
.
1 ce n t p er b u sh el pr e m i u m
.

N o 1 Whit e O at s , a t
. cent p er b u sh el p r em i um .

C o ntr a ct s f o r r ye , by gr a d e a l o ne , d eliver ed in st or e , f o r
i m m e d i at e o r f or f u t u r e d elivery, u nl es s o therwi s e s pecifi ed ,
s h all b e u nd er st o o d a s f or N O 1 o r N o 2 R y e , in s u ch pr o
. .

p orti on s a s m ay b e c o n ve n i ent t o t h e s e ll er , s u b j e ct , h owever ,

t o t h e p r o vi s i on s o f Secti o n 5 o f R u l e XXI .

Fo r d e livery o n a n d a ft er Se pt em b er 9 , 1 9 1 8 , all co n
tr act s f or b arley b y gra d e al o ne , d elivered in st ore , f or
im m e d i ate or f or f u t u r e d elivery, u n les s o therwi s e s pecifi ed ,
s h all b e u n d er s t oo d a s f or N O 4 B arl ey ; provi d e d , howe ver,
.

tha t N o 3 B arley a n d a ll hi gher gr a d es m ay b e d elivere d

.

a t a p r e m i u m o f fi v e ce nt s p er b u sh e l , in s u ch pr o p orti o ns
a s m a y b e c on v en i e n t t o t h e se ll er , b u t in n o ca s e sh all an y
a m o u n t O f l e ss th a n b u s h els o f an y on e gra d e in a n y
o n e e lev a t o r b e d e e m e d a v a li d t e n d er ; s u b j e ct , howe v er ,

t o t h e pr o vi s i on s o f Se cti o n 5 o f R u l e XXI .

On co ntr a ct s f or whe at , r ye , o r o at s , f or fu t ur e d elivery

in s t or e in n o ca s e an a m ou n t l e s s than b u she l s o f
an y o n e gra d e in o n e e l eva t or sh all b e d e em e d a v ali d t e n d e r .

T h e d e liv e ry o f gr ain on th e e x ch a n ge is eff ect ed

by th e tr ansf e r o f w ar eh o u s e r e ce i p ts iss u e d by r egu l a r
e l e v a t o rs T h e f o ll o win g p r o visi o n is m a d e in t h e
.

h
r u l e s o f t e C hi cago B oar d o f T r ad e z l

All d eliverie s u pon contr act s for grain or flax s eed u nl es s ,

o th erwis e e x p r e ss ly p ro vi d e d sha ll b e m a d e b y t en d er o f
,

regu lar warehou s e r ecei pt s whi ch r e cei pt s s h all have b een

,

re gi s t ere d b y an o ffi cer d u ly a p p o in t e d f or th at p u r po s e .

All s u ch wareho u s e r e cei pt s shall b e m ad e t o r u n fiv e d ays

f ro m d at e o f d elivery o n r egu l ar or cu s t o m ary s t or a ge
ch ar ge s ,
whi ch r egu l ar o r cu s t om ary charges shall fo llow
s u ch wareho u s e r e cei pt s a n d b e chargeable u p o n t h e pr o p
e r t y c o v e r e d by t h e s am e a n d s h all b e i ss u e d b y s u ch h ous e s
,

a s h av e co m pli e d with t h e R u l e s o f t h e B o ar d o f Tr ad e a n d
t h e R egu l ati o n s a n d R eq u ir em en t s o f t h e B o ar d o f D irect or s ,

1
C hi cago Bo ar d o f T r ad e A n n ua l R eport 19 18 p 42 R ule XXI
, , , .
, ,
Se ct io n 1
.
 MATE RIALS AN D E QUI PM E NT 1 63

an d h ave b e en d e cl are d r egu l ar wareho u s e s f or t he st or age

o f gr a in o r fla x s e e d b y s a i d B o ar d o f D ir e ct or s ; a n d it sh a ll

b e t he d u ty o f t h e B o a rd O f D ir ect o r s pri o r t o t h e fir s t d a y
,

o f J u ly in e a ch ye a r t o ins p ect a ll wa r eh o u s e s t h e pr o pri et o r s

, ,

o r m a n age r s o f whi ch s h a ll a pply t o h ave t h e ir r e ce i pt s

d e cl are d r egu l a r f o r d elivery o n co n tr a ct s u n d er t h e R u l e s

O f t h e B o ar d o f Tr a d e a n d n o war eh o u s e s h all b e d e cl a r e d
,

a r e gu l ar war eh o u s e u nl e ss it i s c o nv e n i e ntly a ppr o a cha b l e

b y ve ss els o f or d i na ry d raft a n d h as c u s t om ary shi ppi n g
f a ciliti e s a n d u n l e ss t h e s t o r age r at e s o n a ll gra in or fla x
,

s ee d in s u ch war eho u ses in b u lk an d in go o d con d iti o n ,

shall n ot b e in e x ce s s o f o n e cent p er b u she l f o r t h e fir s t

t en d ay s o r p art th ereo f a n d o n a t hir t iet h ( 1 3 0) o f o n e
,
-

ce n t p er b u sh e l f o r e a ch a d d iti o n a l d ay th er e a ft e r u ntil f r o m
a n d a ft er J u ly 1 ,
1 9 1 7 wh en t h e s t o ra ge r at e s sh all n o t b e
,

in e x ce ss o f o n e ( 1 ) cen t p er b u s h el f o r t h e fir s t t en d ay s o r
p art th er e o f a n d o n e twen ty fift h ( 1 25 ) O f o n e cent p er
— - -
,

b u s he l f o r e a ch a d d iti o n a l d ay ther e aft er s o l o n g as s u ch

gra in o r flax s e ed r em ai n s in go o d co n d iti o n a n d u n l e ss t h e
,

p ro pri et o r s o r m an a ger s o f s u ch wareh o u s e a r e in go o d

financi a l s t and ing an d cre dit an d ar e carryi n g o n an d int en d
,

to c o ntinu e t o c arry on t h e l e giti m at e b u s i n e ss o f p u bli c

wareho u s em e n un d er t h e l aws o f t he St at e o f Illino i s an d in
a cco r d a n ce wi th t h e R u l e s o f t h e B o ar d O f Tr a d e o f t h e C ity

O f C hi ca go a n d t h e R egu l a ti o n s a n d R e q u ir em e nt s o f t h e
B o ard o f D ire ct or s a n d u n til t h e pr o pri et or s o r m a n agers o f
s u ch wareh o u s e s h all file a b o nd with s u ffi ci e nt s u r eti e s in
s u ch s u m a n d s u b j e ct t o s u ch co nd iti o ns a s m ay b e d e em ed
n e ce ss ary b y t h e B o ar d o f D ir e ct or s u n d e r t h e R u l e s o f t h e
,

B o ar d o f Trad e an d t he R egu l ati o n s a n d R e q u ir em ents o f

t he B o ar d o f D ire ct or s in r efer en ce t o wa r eh o u s es .

When ever a p pli cati o n shall b e m ad e b y t he p ropri et or s

o r m an agers O f a n y war eh o u s e t o h a ve t h e s a m e d e cl ar e d
a r e gu l a r war e h o u s e f or t h e st o r a ge o f gr a in a n d flax s e e d
u n d e r t h e pr o vi s i o n s o f thi s R u l e ( e x ce pt in c a s e s o f r en ewal

o n t h e fir s t d a y o f J u ly in e a ch y e a r as h er e i n b ef or e p r o
,

v id e d ) a n y gr a i n o r fla x s ee d th a t m ay b e co nt a in e d in s a i d
wa r eho u s e a t t he ti m e o f s u ch a ppli cati o n s ha ll b e req uir ed
,

t o b e r e m o ve d f r o m s a i d wa r eho u s e wh e n a ft e r it sh all
,

have b een gra d e d a n d i ns pe ct e d a ccord i n g t o it s q u ality

a n d c o n d iti o n th e n e x i s ti n g b y t h e d u ly c o n s tit u t e d a u t h o r i
ti e s s u ch grain o r fla x s ee d m ay then a ga in b e r e ceive d i n t o
,

s ai d wareho u s e a n d r e cei pt s i ss u e d th e r e for sh all b e r egi s

t er e d a n d d at e d u p o n t h e d ay wh en s u ch gr a in o r flax s ee d
i s a gai n a ct u ally r e c eive d i n t o s a i d war eho u s e .

T h e c hi ef i n s pe ct o r o f gr a in o f t h e St a t e O f Illin o is m ay ,

u po n r e q u e s t o f t h e B o ar d o f D ir e ct o r s o f t h e B o ar d o f
Tra d e a ppo i n t a s u pe rvi s i n g i n s p e ct o r w h o s h all s o s u pe r
,

vi se t he s t orage an d d istrib u ti on o f grain an d o f flax s ee d

1 64 MARK E TIN G PR O B LE M S
in s u ch ware ho u s e t ha t n o d i s cri m in ati o n o r s e lecti o n ca n
b e m a d e in t h e q u a lity o r gr a d e o f gr a i n o r flax s e e d in t h e
d elive ry o f s u ch gr a i n o r fla x s ee d .

Wa r eho u s e re cei pt s i ss u e d b y wa r eho u s es so d e cl are d

r egu l ar by t h e B o ard o f Dire ct or s shall b e r e gu la r f or d elivery
o n c o n tr a ct s u n d e r t h e R u l e s o f t h e B o ar d o f Tr a d e s o l o n g
a s t h e s a i d wa r eh o u s e sh a ll c o n ti n u e t o b e a r eg u l a r wa r e
ho u s e b u t t h e t erm f o r whi ch a n y war eho u s e is d eclare d
,

a r egu l a r wa r eh o u se t o i ss u e s u ch r e cei pt s s h a ll b e li m it ed
t o a n d e x p ir e o n t h e fir s t d ay o f J u ly in e a ch y e a r No .

re cei pts i ss u ed o n gr a in r e ceive d in a n y wareho u s e s h all b e

regu la r f or d elivery u n d er t h e R u l es o f t h e B o ard o f Tra d e
a ft er th a t d a t e u nl es s t h e war eh o u s e u p o n whi ch it h a s b ee n
i ss u ed h a s a gai n b ee n d e clare d a regu l ar wareho u s e b y t h e
B o ard o f D ir ect o r s ; p r ovided h owever t h at r ecei pt s i ss u ed
, ,

b ef o r e t h e fir s t d a y O f J u ly by war eh o u ses whi ch hav e b ee n

r egu lar wareho u s e s d ur ing t h e pre ced i n g ye ar b u t wh i ch ,

hav e n ot b een d e cl ar e d r egu l ar f or t h e s u ccee d in g ye ar shall ,

b e r egu l ar f or d eliv ery u po n s u ch co n tr a ct s f o r s i x m ont h s

a ft e r t h e fir s t d ay o f J u ly ; b u t n o thi n g c o nt a i n e d h e r e in
sh all preve nt t h e B o ar d o f D ir e ct or s f rom d e cl ari n g a n y war e
ho u s e or t h e r e cei pt s t h ere of irregu l ar at a n y tim e f o r
, ,

vi o lati o n o r n on co m pli an ce with t h e l aws of t h e St at e o f

-

Il li n o i s o r an y o f t h e R u le s o f th e B o ard o f Tra d e o r o f t h e
R egu l ati o n s a n d R equ irem e n t s of t h e B o ard o f D irect or s .

P r ovi ded th at t h e B o ar d o f D ir e ct or s s h all h av e p ower

, ,

when in their j u d gm e nt a n em ergen cy e x i st s requ irin g m or e

s t o ra ge r o om tha n can b e s u pp li e d b y t h e r egu l ar el evat o r
war eho u s es o r b ecau s e o f an in ab ility t o o b t ain i ns u ra n ce
,

o n gr ain st or e d th er ein t o d e cl ar e a n y s t or eh o u s e s v e ss el s
, , ,

o r p l a ce s s u it ab l e f or t h e s t o r a ge o f gr a i n o r fla x s ee d wi t hin
t h e C h i ca go Swit chi n g D i s tri ct wh er ein t h e co s t of d eliv ery
—

t o V e ss el s o r ra ilr o a d ca r s s h a ll n o t b e gr eat er th a n s u ch a s i s
m a d e b y t h e r egu l ar e l eva t or s f o r t h e s am e s ervi ce t o b e —

r egu l ar p la ces f or t h e sto ra ge o f gra in d eliverab l e u nd er t h e

R u l e s o f t h e B o ar d O f Tr ad e .

An d p rovi d ed f u r ther that in ca s e it sh all h a p p e n th at a t

,

a n y ti m e th er e sh a ll b e n o wa r eh o u s e s whi c h s h a ll b e r egu l a r
wareho u s e s f o r t h e s t ora ge o f gra in a n d flax s ee d t h en t he ,

B o ar d o f D ir e ct or s m ay d e clare a n y war eho u s es s u it ab l e f o r

t h e st or age O f gr a in o r flax s eed wh o s e a ggrega t e ca p a city
,

shall n ot e x ceed twenty fiv e m illi on -

b u s h el s ,

re gu lar warehou s es f o r t h e st ora ge of gr a in o r flax s eed ,

u p o n s u ch t er m s a n d f or s u ch p eri o d a s t h e B o a r d o f D ir e c
t ors in it s d is creti on m ay d eem ne ce ss ary o r pro p er a n d t he ,

war eho u s e r e cei pts i ss u e d b y war eho u s e s s o d ecla re d r egu

lar u nd er this pr o vi s o s hall b e r egu l ar f o r d elivery on con
,

tra ct s u n de r t h e R u l e s O f t h e B o ar d o f Tra d e in t h e s am e
,

m an n er as if iss u e d b y wa r eh o u s e s d e cl ar e d r egu l ar u n d er
 MATE RI AL S AN D E QUI PM E NT 16 5

t h e f or ego ing pr o vi s i on s o f thi s s e cti o n in r egard to d ecl aring

wareho u s es re gu l ar f or t he t erm en ding o n t h e fir s t d ay o f
J u ly in ea ch y e ar .

All com p l aint s a gainst el eva to r pr o pri e tors u n der this

s ecti o n sh all b e he ar d a n d d eci d e d b y t h e B o ar d o f D ir e cto r s
of t h e B oar d o f Tr a d e o f t h e C ity o f C hi ca go .

O n an d af t er J a nu ary 1 s t 1 9 1 5 gr ai n in cars in cl u di n g
, , ,
“
tha t grade d s u b j e ct t o a p proval s ha ll b e d eem ed a vali d
,

te nd e r o n c o ntra cts d u rin g t h e l as t thr ee b u s ine ss d ays o f

an y m o nth u n d e r t h e p rovi s i ons o f t h e r ul e s pe rtai ning to
,

t h e d elivery o f warehou s e r ecei pts t h e ra i lr o ad r e ce i p t —

is s u ed a gai n st s am e evi dencing owner shi p s ervi n g t o convey

t h e titl e t o t h e gra in sa m e as war eho u s e re cei pts is s u ed
,

a gains t r in in w r h s — wh en co nf or m in
g a a e o u es g to t h e
f o ll owin g r eq u ir e m ent s :
A Wh en withi n t h e C hi cago Swi t chi n g D ist ri ct ; or if
.
,

a rriving f r o m o u t s i d e o f t h e s am e wh e n it h as re ach ed t h e
,

railroad yard s wh ere s am pl es a r e t ake n by t h e Illin o i s St at e

,

G r ain Ins p e cti o n D epart m ent an d wh e n bill ed t o a n e le

,

v at or t h e r e cei p t s o f whi ch a r e r egu l ar o n d eliv ery ; p r o vi d e d ,

nevertheles s that gr ain s o d elivere d s h a ll b e u nl o a d ed int o

,

t h e e l evat o r t o whi ch it is bill e d b e fo r e t h e d elivery s h all b e

d ee m e d co m pl et e a n d bill s f or gr a i n s o t e n d er ed sh all n o t
,

b e d u e an d p ayab l e u ntil t h e e l evat or r ecei p t co veri n g s am e

shall have b een d elivere d t o t h e b u yer Provi d e d f urther .
,

th at de liveri e s u n d e r this r u l e m ay b e d ivert e d by t he b u ye r

from unl o a din g at a r egu l ar ware h o u se t o a n y o the r u nlo a d
in g where t h e s am e will b e wei gh ed b y t he We i ghing D e p art
m ent o f this As s o ci ati on by payi ng f or t he pro perty b efore
,

d iver s i on.

B Wh en t he gra de o f s u ch grain te n dered i s evi den ced

.

as b eing a ) ro per gr a d e u n d er t h e r u l e s f o r te n de r b y a
ce rti fi cat e of i ns p e cti o n o f t h e Illino is St at e G r a in I ns pe c
,

ti o n D e partm ent sho wing t h e ins pe ctio n t o have b een m a d e

d u ring t he l as t three b u s ine s s d ays o f th e sa m e m o n th ,

wh i ch gr ad e t h e s ell er shall b e d e em ed as gu aran t eei n g t o

t h e b u yer t o r e m a in s u ch u n til t h e b u yer h a s h a d a r e as o n
a b l e ti m e t o u nl o a d ; pr o v i d e d th a t te n d e r s o f gr ai n l o a d e d
,

fro m e l evat ors withi n t h e C h i ca go Swi t chi n g D i stri ct s hall ,

in a d diti o n t o t he I lli n o is St ate G r a in I n s pe cti o n D e part

m en t certi ficat e h av e a certi ficat e o f a ppro val o f it s q u ality
,

b y t he G ra in Sam pling D e part m ent o f this B o ar d b as e d o n

e x a m in ati o n m a d e d u ri n g t h e l as t thr e e d ay s o f t h e m o nth .

Pro vi d ed that if t he gr a de o f grain in car s ins pe ct e d i s on

, ,

reins pe cti on o r o n a ppeal lowere d b y t he Illino i s Sta t e

, ,

G ra in I ns pecti o n D e p art m ent s u ch ch ange O f t h e grad e

,

shall n ot invali dat e an y d eliveri es o n co n t r a ct s o f grai n m a d e

b efo r e t h e gra d e h as b e en so c h an ge d ; a n d t he a d j u s t m e n t o f
an y d am a ge s s u s t aine d by t h e ho l d er o f t h e grain a t t h e
1 66 MARK E TIN G PR O BL E M S
ti m e suc h chan ge in gra d e i s kno wn to t he h ol der s h all th en
b e d et e r m i n e d o n t he b a s i s o f t h e m arke t p ri ce o f t h e d ay
o f d e live ry a n d s h all b eco m e a t o n c e d u e a n d p ayab l e .

“ ”
C Wh e n co v ere d b y a d u ly a u t h o riz ed o rd er r a ilro a d
.

recei pt showi n g t he gra i n t o b e b ill e d t o a regu lar e l eva t o r

pro pe rly e n d o r s e d t o c o n v ey titl e ther e t o T h e d eliv ery .

no ti ce s hall d e s cribe t he ra ilro a d r ecei pt in it s e ss enti al f e a

t u re s ( d at e i ss u i n g r ailroad ca r n u m b er with na m e o r
, ,

i n itial a n d we ight o f co n t ent s ) a n d shall b e t he b a s is o f

,

com p u ting a n d d et erm ini n g a ll it em s ch ar gea b l e t o t h e

p pr o e rty t e n d e r e d s am e a s s t o r a ge c h a rge s a gains t ware

ho u s e re cei pt s Provi d ed that in t h e e ven t o f a ll r egu l a r
.
,

s t orage in t h e C ity o f C hi ca go b eing fill ed o r for a n y r ea s o n ,

u nob t a i na bl e a n d s e ll er s b e ing u n ab l e t o pr ocu r e r a ilr o a d

,

re cei pts c overin g co n s ignm ents o f car s t o regu lar e levat or s ,

d e livery of o ri gi n a l b ill s o f lad ing o r r ailro a d r e ce i pts i ss u e d

t h er ef or t he sam e n o t showi n g cons ignm e nt t o a n y e levat o r
, ,

s hall b e d e em ed a vali d t ender o n co n tra ct s .

D Wh e n t h e q u a n tity s o d eliver e d i s evi den ced by

.

weight certifi cat es O f t he Weighing D epartm ent o f thi s

A ss o ci atio n ; o r if e vi d en ced by we ight certifi cate o ther tha n
,

a b o ve ; o r if t he wei ght b e e s tim at e d o n t h e b a s i s o f t h e

,

rat ed capacity of t h e car s u ch other wei ght certifi cat e o r

, ,

s u ch e stim ated we i ght shall b e d e em e d t o b e gu arant e ed

,

by t h e s eller t o t h e b u yer ; a n d a n y e x ce ss ov er s u ch wei ght

s o e vi d e n ce d at ti m e o f u nl oa d i n g if th e n we i gh e d b y t h e
, ,

Weighin g D epartm e nt o f this As s o ci ati o n s hall b e s ettl e d ,

f or a t t h e cu rr e n t m ark e t va l u e o n t h e d ay s u ch vari ati o n

is known t o b o th parti e s a n d a n y r e ce ss f r om s u ch e s ti
,

m at ed wei ght shall b e s ettl e d f or a t t h e c u rr ent m ark e t

val u e o n t h e d ay o f d elivery T h e wei ght O f all carl ot s s o
.

d eliv ere d an d fi n ally u nl o a d ed a t a n y e l eva t o r t h e r e ce i p t s ,

o f whi ch a r e r e gu l ar o n d elivery sh all b e d eem ed t h e fi n a l ,

weight s o n whi ch settlem ent is m ad e .

E At a n y tim e when in t h e j u d gm ent of t h e B oar d o f

.
,

D ire ct ors an e m ergen cy e xi s t s gr a i n in car s shall b e d eem e d

, ,

a v ali d t e n d er o n contr a ct s o n a n y b u s in e ss d ay o f a n y
,

m o nth when t he gra d e o f s u ch grain t en d ere d is e vi d en ce d

,

a s b e ing a p ro p er gr a d e u n d er t h e r u l e s f o r t en d er by a ,

c ertifi ca t e o f ins pe cti o n o f t h e Illi n o i s St a t e G r a in I ns p e c

ti o n D e partm ent showin g t h e i n s p ect i o n t o have b een m a d e

d u ring t h e p re ced i n g se ven ty t wo ho u r s a n d wh en co n -
,

f o rm i n g t o t h e o ther r e q u ir em ent s o f P aragr a phs A B C , , ,

a n d D o f thi s Secti o n e x ce p t th at a n y e x ce ss o r s h ort age

,

in we i ght s at ti m e o f u nl o a d ing if th en we i gh e d b y t h e ,

We i ghin g D e partm ent O f thi s A ss o ci ati o n sh all b e settle d ,

f or a t t h e c u rr e n t m arket va l u e o n d ay s u ch var i ati o n is

kn own t o b o th p arti es .

“
A l arge p o rti o n of th e fu t u r e s co ntracts on th e
 MATE RIAL S AN D E QUI PM E NT 1 67

C h i cago B o a r d o f Tr a d e a n d o th e r s p e cu l a tiv e m ark ets

a r e s e ttl e d by th e p a y m e nt o f diff e r e n ce s I f th e s p o t
.

p ri ce a t tim e o f s e ttl em e nt is hi gh e r th a n t h e p ri ce
n am e d in th e c o ntra ct th e d i ff e r e n ce is p a i d by th e
,

s ell e r I f th e s p o t p ri ce is l o w e r th a n th e p ri ce n am e d
.

in th e co ntr a ct th e b u y e r p ays t h e d iff e r e n c e T h e

,
.

f o ll o win g st a t em e nt is q u o t e d fr om th e R u l e s o f th e
C hi ca go B oa r d o f Tr a d e 1

I n ca s e it shall a p p e ar t h a t t h e d e livery o f a n y o u t
st an d ing t r a d e O r co n tr a ct b e twe e n m e m b e r s o f t he A ss o
c ia t io n m ay b e o ff s e t by s o m e o t h e r c o r re s po n d i n g tr a d e o r
co n tr a ct , m a d e b y t h e p a rti e s wit h o th e r m e m b er s o f t h e

A ss o ci atio n , an d t h e par ti e s t o s u ch t r a d e o r co n tra ct , o r

their a u tho riz e d a gen t s , co n s en t t o s u ch o ffs e t , s u ch trad e o r
c o n tr act s h a ll b e d e e m e d t o h a v e b e e n s e ttl e d , a n d a n y

b al an ce b e twe e n t he cu rr ent m ark e t v a lu e o f t h e pr o p erty

c ov er e d b y s u ch tr a d e or co n tr a ct , a n d t h e s ev e r a l co n tr a ct

p ri ce s s h all b e d u e an d p aya b l e i m m e d i at ely b y t h e party

f r o m whom s u ch b a l an ce m ay b e d u e t o t he p arty e ntitl e d
t o r e ce iv e t h e s am e u n d er his c o n tr a ct T he cu rre n t m ark e t
.

val u e o f t h e pro perty c o ntr a ct e d f or sh all b e co ns pi c u o u s ly

p o s t e d , a t a s t at e d h o u r e a ch d ay , u n d e r t h e d i r e cti o n o f t h e
B o ard o f D ire ct or s , in t he E x change H a ll a n d in t h e s ettle
m e n t ro o m o f t h e B o ard , wh i ch p o sti n g s h all s erve a s a
b a s i s f o r t h e a d j u s t m en t o f a ll co ntr act s s ettl e d , as he re in
pro vi d ed o n tha t d ay .

Wh y sh o u l d gr a in th a n o n e gr a d e b e m ad e
of m o re
d eliv e r abl e o n s u ch a c o ntr act ?
A l ar ge fl o u r m a nu f a ct u rin g c om p a ny with m ills
l o ca t e d in M inn eap o lis b u ys its wh e a t d ir e c t fr o m
l o ca l e l ev a t o rs O f wh a t i m p o rt a n ce t o this c o m p a ny
.

is t h e o r ga niz ed s p ecu l a tiv e m ark e t ?

T a k e th e c a s e o f a l o ca l f a r m ers e l e v a t o r l o ca t ed
’

a t a c ou ntry p o int in N o rth D a k o t a Ho w ca n it u s e.

“ ”
th e f u t u r e s m a rk e t o f t h e C hi cago B o a r d o f Tr a d e ?
Sh o u l d it o r d in a rily u se th a t m ark e t ?

1
C h ic ago Bo ar d of T r a de , A n n ua l R port
e ,
. u XX I I
1 9 1 8, p 54 , R le ,

Se ct io n 6 .
1 68 MARK E TIN G PR O BL E M S
1 07 . C H A N C E LL O R M A N U FA C T U R I N G C O M P A N Y —
BU Y
I N G C O T T O N D I R E C T F R O M FA R M E R S

T he
v r a nn l p r
e a ge a f
ti n o aw co tt o n in
r ua 1 oduc o

th e w o rl d d u rin g th e fiv e c r o p y ea rs e n d in g A u gu st 3 1 s t ,
1 909 1 3 , w as -
b al e s , th e st a n d ard b al e w ei gh
in g 500 p ou n d s T h e Uni t e d St a t e s s u p p li e d
. Of

this t o t a l p r o d u cti o n , a n a nn u a l a v e ra ge O f
b a l e s I n d i a s u p p lie d
. E gyp t T u rk e st a n
a n d So u th A m e ri ca m o st o f t h e r em a in d e r Fr o m th e .

c r op o f t h e Unit e d St a t e s 6 4 % w as ex p o rt e d A m e ri ca n .

m ills h a v e b ee n t a kin g a gr e a t e r a n d gr ea t e r p r o p o rti o n

o f th e r aw co tt o n cr o p o f t h e Unit e d St a t e s , b u t this

co u ntry , n e v e rth e l e ss , still s u p p li e s a l ar ge p a rt o f th e

d em a n d thr ou gh ou t th e wo rl d f or r aw co tt o n .

T h e b u lk o f th e co tt o n gr o wn i n th e Unit ed St a t e s
is kn o wn a s U p l an d with a n a v e r a ge l en gth o f fib er f or
t h e co mm o n gr a d e s o f o f a n i n ch t o a n in ch I n th e .

b o tt om a n d sw am p l a n d s o f A l ab am a , M ississi pp i ,
Ark a ns as , an d L ou isi a n a a l o n g th e M ississi p p i Riv er ,
l o n g st ap l e U p l a n d co tt o n i s gr o wn with fib ers fr om
t o 1 % in ch e s in l e n gth T h e b est gr ad e s o f th es e .

“ ” ”
a r e ca ll e d B e n d ers a n d P e e l ers T h e m o st v a lu .

a bl e co tt o n p r o d u ce d in this co u ntry , o r e ls e wh e r e , is

th e Se a I sl a n d , gr o wn o n th e isl a n d s a l o n g th e coa st o f
Sou th C a r o lin a a n d G eo r gi a T h e a v e r age l e n gth O f .

Sea I sl a n d st ap l e is 1 % i n ch e s , r a n gin g fr o m l g? t o
2 % in ch e s T h e Sea I sl a n d cr o p s e l d om e x ce e d s
.

b al e s ; i t is ge n e r ally l ess th a n 1 % o f th e Up l an d
c op , a n d
r it is t en d in g t o d e c lin e in qu a ntity .

o o
R efe r e n ces o n t h e r a w c tt n tr a d e i n cl d e — U S C m missi ner
1
u . . o o
o o o
o f C r p r at i ns , R ep rt on C tt n E x cha n ges o o o
M e lv i n T C pela n d , . . o
o u u
C tton M a n f act r i n g I n d s tr y of the Un i ted S ta te s uG G H eb n er , . . . u
u u
A gr ic lt ra l C mm erce J h n A T d d , T he W r ld s C tt n C r p s
o o o o o o o
’
. . .

o o o
N a t i n a l As s c i a t i n o f C tt n M a n f a c t r e rs , Yea r B k o o U S u u oo . . .

u u u o o
B r ea o f t h e C e ns s , C tt n P r d cti on a n d D is tri b ti n (a nn al ) o u u o u .

o
L C n an t ,
.
“
T he Unit e d St at e s C tt n F t r es A ct ,
”
A me ri ca n o o u u
o o
E c n m i c R evi ew , M ar ch , 1 9 1 5 I N H ff m a n n , T h e C tt n F t r es
“
. . .o o o u u
A ct ,
”
ouJ rn a l of P li tica l E c n m y, M ay, 1 9 1 5 o o o
D E E ar l e a n d . . .

W S D ea n , T h e C las s ifi ca t i n a n d G r adi n g o f C tt n , U S Dep a rt

. .
“
o o o . .

u u
m en t of A gri c lt r e Fa r m e r s B lleti n N o 5 9 1
’
W A Sh e r m a n , u . . . .

Fr e d T ayl r , a n d G J Br a n d ,
o St d ies O f P r im a ry C tt n M ar k e t u o o
“
. .

o o
C n dit i ns i n O k la h m a , o
U S D ep a rtm en t of A gri c lt r e, B u lleti n
. . u u
N o 36 . U S D e p a rt m e n t o f Agr ic l t r e , T he M a rk et R ep rte r ,
. . . u u o
Apr il 1 0, 1 9 20 C mm ercia l a n d Fi n a n ci a l Chr on i cle E c n m i c W r ld
. o . o o o .

o ou
N ew Y rk J rn a l of C mm er ce o .
 MATE RIAL S AN D E QUIPM E NT 169

E ach O f th e s e typ e s o f c o tt o n h as its o w n u s es .

T h e Sea I sl a n d is u s e d o nly in s p innin g v e ry fin e y a rns ,

th e l o n g fib ers p e rm ittin g it t o b e d r awn o u t int o a
fin e t h r ead . T h e l o n g st ap l e d U p l a n d co tt o n is a ls o
u s ed f o r fin e s p innin g, a n d f alls int o a pp r o xim a t e ly

th e s am e cl ass as E gyp ti a n c o tt o n So m e E gyp ti a n

.

c o tt o n , it m a y b e st a t e d , is i m p o rt e d int o th e Uni t e d

St a t e s e sp e ci a lly f o r th e m a n u f a ct u r e o f h o si e ry a n d
au t o m o bil e t ir e y a rns I n d i a n co tt o n is o f sh o rt
.

l en gth a n d low gr a d e ; it h as b e e n u s e d p arti cul arly i n

C e ntr a l E ur o p e f or t h e m a n u fact u r e o f c o ars e y a rns .

U p l a n d co tt o n s u pp li e s th e l ar ge tra d e int e rm e d i ary

b etw ee n th e s e e xtr em es U p l a n d co tt o n , h o w e v e r ,
.

v a ri es in l e n gth a n d str e n gth O f fib e r , in c o l o r , a n d in

fr ee dom fr om dirt , a n d p o ss e ss e s ch aract eristi cs p e ou
lia r to th e l o ca lity in whi ch it is gr o wn With th e .

m a chin e ry a n d m eth o d s in v o gu e a ce nt u ry a go co tt o n
was co tt o n , b u t a s a r e su lt o f r e fin e m e nts in t e ch n iq u e
a n d d iv e rsifi ca ti o n o f p r o d u ct , n o w a d a ys - —
a s p inn e r

give s ca r e fu l a tt e nti o n t o th e e x a ct q u a lity o f th e

co tt o n th a t h e p u r ch a s es .

T h e first st a ge in th e m o v em e nt o f co tt o n fr o m th e
fa rm to th e f a ct o ry is to th e gin So o n aft e r it is .

p i c k e d , t h e f a rm e r t a k e s his co tt o n t o t h e gin in a

n ea rby t own wh er e th e s ee d s ar e r em o v e d A t th e .

gin th e co tt o n is p ack e d l o o s e ly in l a r ge b a l e s O r di
.

n a r ily it is s o l d by th e f a rm e r i m m e d i a t e ly a ft e r gin

nin g Oft e ntim e s th e Sou th ern f a rm e rs a r e in d ebt

.

t o th e l o ca l m e r ch a nts f o r s u pp li e s s o l d t o th e m o n
cr e d it d u rin g th e gr o win g s e as o n . Th es e m er ch a nts
O ft e n h a v e a li e n o n th e c o tt o n a s s e cu rity a n d t o th em

th e in d ebt e d f a rm e r m u st s e ll . I n s o m e ins t a n ces th e

o wn ers o f p l a nt a ti o ns h a v e m a int ain e d th e ir O ld r el a

ti o ns with th e f a ct ors a t th e p o rts w h o giv e th e m

fin a n c i a l a ssist an ce d u rin g th e gr owin g s eas o n T h e .

c o tt o n fr o m th e s e p l a nt a ti o ns is c o nsi gn e d t o th e s e

f a ct o rs for s al e o n c o m m issi o n Fa r m e rs w h o a r e n o t
.

u n d er fin a n ci a l O bli ga ti o ns t o a l o ca l m e r ch a nt o r t o

a f ac t o r s e ll th e ir co tt o n o r d in a rily a t th e c ou ntry

p o int wh e r e it is ginn e d . So m e ti m e s t h e fa r m e r
p l ac e s it in a w a r eh o u s e o r h e m a y h a u l it b ac k t o his
1 70 MARK E TIN G PR OB LE M S
f a rm t o b e st o r ed fr e q u e ntly in th e d o o rya rd with ou t
,

p r o t e cti o n fr o m t h e w e a th er .

I n th e co u ntry t o wns wh e re t h e c o tt o n is ginn e d ,

it is o r d in arily s o l d by th e fa rm e r o r th e cou ntry st o re

k e ep e r t o r ep r es e nt ativ e s o f fir m s o f co tt o n m er ch ants .

Th es e firm s o f c o tt o n m er ch a nts ar e O f s ev era l typ es .

So m e ar e o p er a tin g o n a s m a ll s cal e b u yin g f o r r es a l e

,

in l a rge r l o ts t o o th er m e r ch a nts A t th e o th er e xtr em e

.

ar e a f ew l ar ge fir m s o f co tt o n m e r ch a nts w h o b u y a t ,

l o ca l p o ints in th e Sou th a n d m aint a in s e llin g o ffi ce s in

th e l a r ge co tt o n m a nu f act u rin g d istri cts in t h e Unit e d
St a t e s a n d in E u r o p e T h e co tt o n m e r ch a nt p ays cash
.

f or t h e c o tt o n th a t h e b u ys a n d s o rts t h e co tt o n int o
,

e v e n ru nnin g l o ts fo r r e s a l e Fr o m th e co u nt r y p oints
.

co tt o n m o v e s t o w a r d l a r ge r ce ntr a l p o ints wh er e th e

s m all co tto n m er ch a nts fr e qu ently s e ll to ex p o rt

b u y e rs o r o th e r l ar ge d ea l ers in r aw c o tt o n .

A c o tt o n m er ch ant b e fo r e b u yi n g a b a l e o f co tt o n
fro m a fa rm e r e xtr ac ts a s am p l e fr o m th e b a l e E a ch .

s am p l e w e i ghs fr om O n e h a lf to o n e p o u n d an d O ft e n
-
,

tim e s tw o o r thr ee h o l e s ar e cu t in th e b al e f or s am p lin g

b e fo r e th e co tt o n is s o l d by th e fa rm e r E ach tim e .

th ere aft er th a t th e co tt o n is O ff e r e d f or s a l e a s am p le ,

is t a k en fo r insp e cti o n t o d et e rm in e its q u ality .

Th e f o ll o win g st a t em ent r egar d in g th e p u lli n g O f

s am p l e s is giv e n in a b u ll e tin o f th e D ep art m e nt O f
C o m m e r ce p u blish e d in
T h e m er chant , wh o a s a r u l e pu r ch as es f or f u t u r e sa l e
r et ai n s a lib era l s am pl e , wh i ch i s give n a m ar k o r nu m b er cor
res p o n d i n g t o tha t prev i o u s ly a tt ache d t o t h e b al e , a n d
whi ch m ay b e d ivi d ed int o s everal s am ples t o a cco mm o d at e
pr o s pe ctive b u y ers . T h e b u lk o f t h e c otto n i s s ent t o t h e
co m pr e s s f o r r ecom pr e ss i o n , a n d if n ot pr e vi o u s ly s o l d f or
d e liv ery is st or ed a t t h e c o m pr e ss a t fix e d c h ar ge s f or war e
h o u s i n g, i ns u ran ce , e t c , t h e m i n im u m ch ar ge b e ing f o r o n e
.

m o n th T h e war eh o u s e f a ci liti e s a r e v ery li m it e d a n d

.

ther ef ore t h e b u lk of t h e co tt o n awaiting s al e a n d d elivery

is m a sse d o n th e street s in s o ca lle d cott o n d i stri ct s , in
-

incl os ed ar eas d e stit u t e o f covering, o n p latform s at rail

roa d st ati o ns a n d st eam ship t ermi nals , s om e o f whi ch ar e
Joh n
1 M C ar s o n
.
,
P ack i n g a n d M ar k e t in g o f C tt n , o o
U S . .

Departmen t of C om mer ce o
a n d La b r, Specia l A gen t S erie s N o 6 8 , p 9 . . .
 MATE RI AL S AN D E QUIPM E NT 17 1

co vered in wh ole or part by a ro of b u t n one o f whi ch is

inclo s e d s o that t he pro p erty i s witho u t pro per pr o t e cti o n
,
.

R eco m press i o n d oes n ot ins u re t he b ale n o t s o l d f o r d elivery

a ga ins t f u r the r s a m p lin g ,
with res u lt ant d am age t o t he
covering a n d l o ss o f c ott o n .

T h e c u st o m of pu lling s am pl e s i s stro ngly intr en ch e d ,

fir s t b ecau s e of l o ng u s age ; a n d s e co nd b e cau s e it is hi ghly

, ,

pr ofit ab l e t o m er c h an t s a n d f act o r s . It s co n tinu an ce i s

nat u rally d esir e d by t h os e b enefit e d T h e b u ye r at po int s
.

d i st ant f r om pr o d u cti o n r e gar d s it wi th f av o r b ecau s e t h e

sam pl e f u rn i sh ed as s i s t s him in d e t erm i n i n g t h e q u ality o f
t he c o tt o n or in con firm i n g t he j u d gm e n t o f h is a gent T he .

m er ch ant an d f a ct or a n d o the r i n t erm e d i ari e s f avo r it

b ecau se e a ch s am pl e p u ll e d h as intrins i c va l u e T h e a ggr e
.

gat io n o f th e s e s am pl e s at t h e cl o s e o f t h e s e as o n f or m s a
co ns i d er a b l e p o rti o n o f a b u lk es tim at e d a t b al e s .

Thi s h as b eco m e known a s t h e c ity cr o p an d it s av era ge

,

a n n u a l v a l u e i s p l a ce d a t T h e i n co m e t o ind i
vi d u al m i d d lem e n f ro m s al e s o f s am pl e s v ari e s a ccord ing to
t he n u m b er o f b al e s p a ss e d u p o n a n d p u ll e d T h e city
.

cr o p is s a i d t o c o n tri b u t e l ar ge ly t owar d payin g r u nni n g

e x p ens e s o f m any b u s i n e ss h o u s es th a t r a i s e or p u ll it T he .

s tat em ent h as b ee n m ad e th at as m a n y as 4 5 o r 50 b al e s
o f c o tt o n d eriv e d f r o m p u lli n g s a m pl e s h av e b e e n s o l d a t
t h e cl o s e of t h e se as o n by an ind ivi d ua l co n cern .

A t s om e co nv e ni e nt p o int in tr a nsit o r a t th e p ort ,

th e c o tt o n is c om p r ess e d ; th e gin b a l e is p u t int o a n

hyd r au li c p r e ss whi ch in cr eas es its d e nsity a n d r ed u ces
its siz e in o r d e r t o e co n om iz e in h a n d lin g
,
.

I f th e C h a n cell o r M a nu fa ct u rin g C o m p any with ,

a co tt o n m ill o f s p in d l es m an u fa ct u rin g m ed i u m
gra d e gr e y c l o th l o ca t ed in ce ntr a l G e o r gi a u n d ert ak e s
, ,

to b u y its s u p p ly o f c o tt o n dir e ct fr o m f arm e rs wh a t ,

d oe s it gain ? Wh a t d isa d va nt age s d o es it in cur ?

1 72 MARK E TIN G PR OB L E M S
108 . D UK E M A N U F A C T U R I N G C O M P A N Y —
B UYI N G FR O M
C O T T O N M E R C HA N T S
T h e Du k e M a nu fa ct u rin g C o m p a ny in Fa ll R iv e r ,

M ass a ch u s e tts o p er a t es a m ill o f

, s p in d l e s f o r
th e m a n u fa c t u r e O f st a n d a r d p rint c l o th This co m .

p a ny o r d in arily b u ys its r aw c o tt o n fr o m c o tt o n m er
c h a nts w h o h a v e r ep r es e nt a tiv e s l o ca t e d in Fa ll Riv e r .

Wh a t a d va nt age is th er e t o th e D u k e M a nu fa ct ur in g
C om p a ny in f o ll owin g this p o li cy ?

109 . E FF E C T OF I N T R O DU C T I O N O F G I N C O M P R E SSE D
-

B A LE O N M AR K E T I N G M E T H O D S

An o rd in ary gin b al e o r p l a nt a ti o n b a l e o f c o tt o n
m ea su r e s a b ou t 56 by 30 by 4 8 in ch e s a n d th e d e nsity
is a b o u t 1 2 p ou n d s p er cu bi c f o o t A n o r d in a ry r ecom
.

p r e ss e d b a l e m e a s u r e s a b ou t 5 6 by 30 by 2 4 i n ch e s a n d
h as a d e nsity o f a b o u t 24 p ou n d s p er cu bi c f o o t .

D u rin g r e cent y e a rs th e r e h a s b ee n s o m e in cr ea s e
in th e u s e o f wh a t a r e kn o wn as hi gh d e nsity b ale s an d
gin c o m p re ss e d b a l e s
-
A gin com p r ess e d b a l e m ea s
.
-

u r e s a b o u t 4 8 by 1 8 by 30 in ch e s o r 54 by 26 by 2 0

in ch es an d h as a d e nsity of ab ou t 3 0 p o u n d s p er cu bi c
f oo t 1 I n asm u ch as t h e h i gh d e nsity b a l e c ann o t b e
.

s am p l e d a cco r d ing to th e o r d in ary m e th o d s th e co v er ,

in g r em a in s int a ct a n d th er efo r e t h e cott o n is b e tt er

p r o t e c t e d in h a n d lin g S
. o m e m a n u f a c t u r e rs h a v e n o t
b e e n in fa v o r o f th e hi gh d ensity b a l e b ecau s e th ey ,

b eli ev e th a t th e q u a lity o f th e fib e r is inj u r e d by th e

g r e a t e r c o m p r e ssi o n . This is a d is p u t e d p o int.

Jo h n M C ars o n P acki n g a n d M ar k e t i n g o f C o tt o n
“
1
.
, ,
U S . .

Depa rtmen t of C om mer ce a n d Labor S pecia l A gen ts S eri es N o 6 8

,
.
,

pp 10, 1 9, 2 1
. .
 MATE RIALS AN D E QUIPM E NT 1 73

T he n r ss e d b a l e , a cco rd in g t o e st im a t e s
gi co m p e
-

m ad e by th e C o ns e rv a ti o n D ivisi o n o f th e War I n d u s
tri e s B oar d d ur in g th e w ar , if u ni v ers ally u s e d in th e
Sou th , w o u l d yi e l d a s a v in g o f car l o a d s o f

fr ei ght s p a ce in a y ea r I t w o u l d a ls o yi el d a s a v in g
.

o f a b ou t t o ns o f st e e l f o r ti e s a n d a ls o a
su bst anti a l q u antity o f b a ggin g .

How w ou l d th e ge n e ra l intr o d u cti o n o f t h e gin

c om p r e ss e d b a l e n e ce ss a rily a ff e c t t h e m e th o d s by

whi ch co tt o n is b ou ght a n d s o l d in th e So u th ?

1 10 . WA T K I N S C O M PA N Y —
C O O P E R A TI VE C OTT O N
WA R E H O U S E S
T h e f o ll o win g st a t em e nt is q u o t e d fr o m a b u ll e tin
o f th e Unit e d St a t e s D e p a rt m e nt o f A gri cu lt u r e :1

Fi n a n ci n g t h e co tt o n cr o p i s o n e o f t h e m o s t d i ffi cu lt ,
a n d a t t h e s a m e ti m e o n e o f t h e m o s t i m p o rt a nt p r o b l ems

co nf r o n ting t h e s o u th er n f ar m e r a n d t h e s o u th ern b u s i n e ss
m an .In t he li gh t o f a ll t he f a ct s it s e em s re as o n abl e t o
s t at e t h at b u t little cott o n wo u l d b e s t o re d o r i ns u r e d if it
were n ot ne ce s s ary t o d o s o in o r d er t o n ego ti at e l o a n s with
c o tt o n a s c o llat er a l T he b an k s ar e e n tire ly wil lin g t o
.

a d va n ce m o n ey o n co tt o n o n li b e r a l t er m s wh e n it i s p r o p erly
s t or ed an d i n s u r e d , b u t they a r e n o t a l way s ab l e t o a d va n ce
the s e n ece ss a r y f u n d s E v en in ye ar s wh en pri ce s a r e s ati s
.

f act o ry , an d b u t litt le c o t t o n i s h el d , it t a k e s e n or m o u s s u m s
o f m o n ey t o fin a n c e t h e m a r k e ti n g o f t h e c r o p , a n d wh e n t h e

m a rke t i s u n s at i s f a ct o r y a n d m an y p e r s o n s wi s h t o h o l d
their cott o n f o r b ett er p ri ce s , it i s a l m o s t i m po ss i b l e f o r t h e
p res ent b ank i n g in s tit u ti o n s t o s u pply t h e n e ce ss ary f u n d s .

T h e f arm e r f r e q u en tly h a s n o o pe r ati n g ca p it a l a n d th a t o f

t h e b a n k i s li m it ed C o n s e q u e n tly , w h en a m ark e t fo r
.

c o tt o n p r a cti cal ly d i s a p p e a r s , it i s i m p o ss i b l e f o r t h e b a n k s

o f t h e co tt o n pr o d u c i n g s e cti o n t o m e e t t h e ir o b li gati o ns
-
.

S u cce s s in d ev e l o pi n g a n a d e q u at e a n d e ffi ci e n t sys t e m o f
1
o R b e rt L N ix n ,
. o C o tt o n War h ouse s
e , U S
. . Depa rtm ent f
o
A gric u u u
lt re , B lleti n N o . 21 6 , p p . 2— 5, 1 0— 1 2 .
1 74 MARK E TIN G PR O BL E M S
s t orage ho u s es d e pen d s l argely t i ing s u ffi ci en t
u po n ob a n

c a pit a l t o fi n a n ce t h e c o tt o n cr o p M an y l ett er s fr o m b ank

.

e r s war eh o u s e m e n a n d b u s i n e s s m en ge n e r a l ly i n d i ca t e a n
, , ,

e n tir e willi n gn e s s a n d e v e n e a ge r n e s s o n t h e ir p a r t t o e r e ct
s t o rage ho u s e s o f s u ffi ci e n t ca p a city i f o n ly m o n ey c o u l d b e
,

o b t a i n e d in o r d e r t o e n a b l e f a r m e r s a n d o t h e r s t o h o l d co tt o n .

It wo u ld s e em that th e b an k s wo u ld i n cre a s e th eir c a pit a l

s t o ck t o s u ch a n e x t en t that the y wo u l d b e in p o s iti o n t o
a d va n ce a ll t h e f u n d s n ee d e d B u t it m u s t b e r em e m b e re d
.

here a s s t at e d in co n necti o n with s t ori n g cott on t ha t it i s

, ,

o n ly wh e n t h e m a rk et i s u n s a ti s fa ct o ry th at t h e f a rm e r n ee d s

t o h o l d his co tt o n a n d th er e f or e n e e d s a n u n u s u a l a m o u n t
o f c a p it al T h e b a n k s o f co u r s e c an n ot k ee p o n h a n d
.
, ,

u n li m it ed f u n d s t o m e et thi s o cca s i o n a l d e m a n d It a l s o .

m u s t b e r em em b er e d th a t t h e f arm er i s n ot a lway s r e as o n
a bl e in his d em a n d f or f u n d s a t s u ch a ti m e Whe n co tt o n .

is b ringi n g 13 or 1 4 ce n t s p er p o u n d h e o ft e n s ell s hi s cr o p
a s f a s t a s it i s gi n n e d with o u t r e f er e n ce t o t h e d i s a s tr o u s
e ff e ct it m a y h av e o n t h e m a r k et s p en d s t h e p r o ce e d s a n d
, ,

d ev ot e s a ll hi s e n er gi e s t o r ai s i n g a l a r ge cro p f o r t h e f o l
l owi n g ye ar While t h e co tt o n i s growi n g he s pe n d s f o r hi s
.

s u pp li e s o n t h e b a s i s o f a f u ll cr o p f or whi ch h e e x pe ct s t o
r eceive t h e m a x im u m pri ce When b e ca u s e o f o v er pr o
.
,

d u cti on o r u n u s u a l pre ss u r e o n t h e m ark et t he pri ce f alls ,

a ppr e c i a b ly h e fi n d s th a t t h e m er cha n t s e q u ity in t h e

’
,

co tt o n is gr e at e r th a n its ca s h v a l u e He th e n e x p e ct s t h e
.

b a n k s t o a d v an ce h im m o ney o n t h e b a s i s o f t h e p ri ce s th at
p re va il e d wh e n co n d iti o n s w er e f avo r ab l e o r p erh a p s o n ,

t h e co s t o f pr o d u cti o n Whil e co tt o n is re co gni z e d a s t h e

.

b e s t co lla t er a l it will n o t b e a ccept ed b y b u s iness m en o n

,

s u ch cond iti o n s .

It r ea d ily b e s een tha t o n e o f t h e great est need s o f

c an
t h e co tt o n f ar m er is t o get a wa y f r o m t h e pr e s e nt cr e d it
sys t em M any e s p e ci ally tho s e o f t h e t e n a n t cl a ss p ay t h e
.
, ,

s u p ply m er cha n t a n a dvan ce o f fr om 2 5 t o 35 ce n t s o n a

d o ll ar s wo rt h o f s u ppli e s a n d th e s e s u p p li e s ar e a ct u a l
’
,

n e ce ss iti e s Th e s e a cco u n t s o rd i n arily r u n f ro m s ix t o

.

e i ght m o n th s Su ch e x o rb it a n t r a t e s o f i n t er e s t w o ifld b e
.

d i s a s tr o u s t o an y cl a ss of p e o pl e Wh en t h e cro p i s h ar
.

ve st e d t h e f arm er d i s p o s e s of hi s cott o n a n d s ettle s h is

a cco u n ts with t h e pr o cee d s pro vi d ed o f c ou r s e th at h e
, , ,

re ceives s u ffi ci en t f u n d s f o r thi s p u r p o s e Th en it i s u s u al ly .

ne ce s s ary f or him t o m ort gage h is next ye ar s cr o p t o t h e ’

s u p ply m er cha n t in o r d er t o O bt ai n cr ed it whi ch i s n e ces ,

s ar y t o e n ab l e h im t o liv e wh il e t h e cr o p i s b eing m a d e .

While it i s d i ffi cu lt t o s ee h o w thi s s it u ati o n can b e r em ed i ed ,

o w i n g t o t h e f a ct th a t t h e s e t e n an t s h av e n o m e a n s o f living
whil e t he crop is b e ing m ad e witho u t tra d ing with s u pply
 MATE RIAL S AN D E QUI PM E NT 1 75

m er cha nt s , it d o e s s eem th at t h e s it u ati o n wo u l d b e i m pro ved

gr eatly b y e s t ab li shi n g a sy s t e m o f w ar eh o u s es a n d e n co u r ag
in g t he t ena nt s t o s t o r e s u ch c o t to n as i s n o t ab s o l u te ly
ne ce ss ary t o s ettle the ir a cco u n t s I f thi s p la n sho u l d b e
.

p ur s u e d f o r t w o o r thr ee y e ar s , whil e e co n o m y in livi n g w as

e x er ci s e d , m an y co u l d e ve nt u a lly f r e e t h e m s e lv e s f r o m t he

pres e nt sy s t e m .

T he m e r ch ant i s al m o s t as h el pl e ss a s t h e f ar m e r He .

a d va n ce s s u p p li e s whil e e x p e cti n g co tt o n t o b ri n g a f airly

go o d pri c e . In m o s t c as e s h e h as b o u ght hi s s t o ck o n ti m e
an d cann o t m ee t hi s o w n o b li gati o ns u n til t h e f a r m e r s
’

a cco u nt s a r e p ai d When ever t h e pri ce i s s o lo w th at t h e

.

farm er f ail s to m eet hi s O b li gati o n s , t h e m er ch a n t i s li k e ly

to b e s eri o u s ly e m b arr a ss ed L at e in 1 9 14 , f o r i ns t a n ce ,
.

m any f ar m er s r e f u s e d p o s itiv ely t o s e ll th eir co tt o n , a n d

m a ny o f th e m f a iled t o m e e t t h eir o b li gati o n s , t h u s m a k i n g
it es pe cially h ard o n t h e m er chan t Wh en th e pri ce i s
.

“ ”
u n u s u ally lo w , t h e m e r ch a n t can n o t a ffo r d t o cl o s e o u t

t he t e n ant .T h e co tt o n , if thro wn o n t h e m ark et , wo u l d

n o t bring e n o u gh t o s e ttl e t h e a c co u nt I f t h e m er ch a n t
.

ins i st ed o n s elling t h e co tt o n h e n ece ss ar ily wo u l d l o s e m u c h

o f t h e m o ney d u e h im .

It is e q u ally tr u e th at t he local bank er is hel pl es s in

s u ch a sit ua ti o n Hi s b a n k a dvan ces s o m e m o n ey t o l o ca l
.

m er chan t s a n d s om e t o t h e far m er s He h as b o rrowe d m o s t

.

Of this m o n e y f r o m s o m e l arger i n s tit u ti o n whi ch i s u s u ally

l o cate d o u ts i d e o f t he co t to n - pro d u ci n g s e cti on He i s .

s u ppo s e d to pay this m o ney b ack a t t he ti m e t h at c o tt o n i s

pi cked . Whe n t he far m er fail s t o m ee t h is o b li gati o n t he
m e r ch an t n at u r a lly fin d s it d i ffi c u lt t o p a y h is b a n k e r .

T hen t he l o cal b ank er is d e pend ent u po n t h e m er cy o f t h e

'

lar ger ins tit u ti o n .

A well-o rganiz ed syst em o f cott o n wareh o u s e s wo u l d b e

of t h e gr e at est as s i s t a n ce t o t h e f a r m er , t h e s u pply m er
ch a nt , a n d t h e l o c al b ank e r in fi n a n ci n g t h e c o t t o n c r o p ,
es p e ci a lly in ti d in g o v e r an e m e r ge n cy Th ere i s a s eri o u s
.

nee d f or wareh o u s es whos e recei pts wo u ld b e a cce pt e d as a n

a bso l u t e gu ara nt ee th a t a c e rt a in am o u nt o f c o tt o n o f a
d efini t e gra d e a n d in m arke t a b l e co n d iti o n h a d b ee n s t o r e d
with t h e war eho u s e co m pany U n d e r s u ch co n d iti o ns it
.

wo u l d b e v ery e as y f or t he f ar m er t o s t o re hi s cott o n a n d
o ff er t he r e cei p ts t o his s u pply m e r c h a n t a s co ll at e r a l f o r

e xt e n d ing t h e ti m e in whi ch his a cco u n t m u s t b e p ai d T he

.

m er chant in t u r n c o u l d s u rr end e r th e s e r e ce i pt s t o t he l o ca l
b an k er a n d e x t en d t h e ti m e o f hi s l o a n T h e l o c a l b a n k er
.

wo u l d the n u s e the s e re cei p ts in a s i m ilar w ay t o e xt en d t he

tim e o f hi s l o an with t he l arger i ns tit u ti o n In pra cti cally .

every ins ta n ce t h e l ar ge b an k e r wo u l d b e gl a d t o e xt e n d
the tim e of paym ent when th es e r e cei pt s wer e o ffer e d as
1 76 MARK E TIN G PR OB LE M S
co ll at era l I n m any i n s t an ces t h e r at e o f int er es t wo u l d
.

b e gre atly r e d u ce d Thi s is o n e o f t h e very i m po rt ant f u nc

.

ti o n s O f a n e ffici ent sys t em o f wareho u s e s a n d t he nee d o f ,

s u ch a sys t em i s e x tr em ely u rgen t .

While an a tt em pt has b e en m ad e t o s how th at i n s t or age

ca p a city t h e wa r eh o u s es n o w in u s e a r e f u lly a d e q u a t e i t ,

i s n o t m e a n t t o c o n ve y t h e i m pr e ss i o n th a t th o s e w h o
pr o
d u ce co tt o n can get pr o per a n d effi ci e n t wa r eh o u s e s ervi ce .

Thi s i s f ar f rom t he c a s e M o s t O f t h e b e s t st or a ge h o u s e s
.

b el ong t o t h e co tt o n m ill s an d t o c o tt o n f a ct ors o r c o m mi s

sio n m er chants T h e m ills hav e b u i lt th eir war eho u s es f or
.

s tori n g t h e co tt o n whi ch they b u y f or S pin n i n g Th ey wer e .

never int e n d ed a s p u b li c s t ora ge h ou s e s a n d they a r e avail

,

a b l e f or s u ch u s e i n v ery f e w i n s t a n ce s T h e f a ct o rs h ave
.

n ot b u ilt war eh o u s e s f o r th e p u r p o s e o f d oi n g a st o r a ge b u s i
nes s b u t in or d er t o a id in their r e gu l ar tra n s a cti ons B ut
, .

f ew o f th e s e p er s o n s wo u l d b u il d war e h o u s e s f o r t h e st or a ge
f ee s th ey co ll e ct b u t th e y a r e f or ce d t o O p erat e t h e war e
,

ho u s es i n or d er t o han d le t h e cott on whi ch i s c o n s i gn ed t o

them f or s al e It will b e s een ther e for e that b u t f e w o f t h e
.
, ,

b e s t s t ora ge h o u s e s n o w in u s e a r e a v a ila b l e t o t h e f ar m e r
u n l e ss h e i s willi n g t o s h i p hi s c ott on t o t h e f a ct o r a n d p ay
him a f ee f o r s elli n g it in a dd iti o n t o r e gu l a r st o r age ch arge s
,
.

M an y f arm er s ar e av er s e t o shi p p i n g t h eir cott o n t o an other

t own an d con s i gni n g it t o a f act or or c om m i ss i o n m er chan t .

They u s u ally e x p e ct t o r e ceive t he m on ey a t t he tim e t h e

co tt o n is d e live r e d M an y f arm ers ar e r el u ct an t t o p ay
.

a n y ch ar ge s wh at e ve r Th i s a ttit u d e i s u n fort u nat e f or it

.
,

e li m in a t e s th e m f r o m p arti ci p ati on in t h e u se o f t h e b e s t

st or a ge f a ciliti e s .

T h e s ervi ce r en d er e d b y t h e s m all war eh o u s es in t h e

pri m ary m ar k et s i s a lm o s t u n iver s ally u n s ati s fa ct o ry T he
.

war eho u s e o wner s ar e n o t t o blam e f o r this po o r s ervi ce .

T h e c o s t o f h an d li n g i s m u ch gr e at er th a n in t h e c a s e o f
l arger e s t ab li shm en t s an d t h e in s u ran ce r at e i s u s u ally f o u r
,

o r fiv e ti m e s a s gr e at a s in t h e s t a n d a r d wa r eho u s e s in l a r ger
t o wn s O n e m i ght a t fir s t b e i n cli n e d t o thin k t ha t the y
.

S ho u l d e r ect co s tly b u il d i n gs b u t in m o s t c a s e s thi s wo u l d

,

n o t pay , f o r t h er e i s n ot a s u ffici en t v o l u m e o f b u s i n e ss .

Very f ew f arm ers will s t or e the ir c ott on whe n t h e m ark e t

p ri ce i s f a irly s a ti s f a ct o ry A goo d s t orage b u ild in g m ight
.

b e e r ect e d in a s m all t o wn a n d a f a ir pr o fit b e m a d e f or o n e
ye ar b u t it m ight b e fo u r ye ar s o r e ve n l onger b ef o r e it
,

wo u l d a ga in b e well patr on iz e d T h e chan ce s a r e that d ur

.

in g t h i s p eri o d t he f e e s co ll e ct ed wo u l d n ot p ay t h e c o s t o f
o p er ati o n . T h e i n ve s t or wo u l d l o s e a ll o f t h e m o ney m a d e
in on e ye ar in a d d iti on t o t h e i n t er e s t o n t he f u n d s i n ve s t e d
 M ATE RIALS AN D E QUI PM E NT 1 77

in t he b u ild ing T he res u lt is that m o s t o f t he wareho u s e s

.

e r e ct e d in s u ch t owns a r e o wne d pri m arily b y m er ch an t s o r

co tt o n b u ye r s f or u s e in co n n ecti o n with th e i r b u s i n e ss .

They a r e n o t int end ed f o r t he u s e o f f ar m er s a n d when a ,

year o f very lo w pri ces com e s they a r e n ot in p o s iti o n t o

render t he s ervi ce t h at t h e farm er e x pect s .

Fr om t h e f o re go i n g it wo u l d s ee m th at t he m ost s ati s
f act ory s ol u ti on O f t h e s it u ati o n wo u l d b e fo r t h e f ar m er s t o
f orm coo p erative as s o ci ati o n s a n d b u il d t h e ir o w n s t o r a ge
hou s e s They ca n n o t e x p e ct o ther s t o inve s t t h o u s an d s o f
.

d o lla r s in st o rage h o u s e s tha t will lie i d le f o r s eve r al ye ar s

a n d m a k e a p r o fit f or o n ly o n e y e ar N o b u s i n e s s m en wi ll
.

i n ves t th eir m o n ey in s u ch a way Farm e r s m u s t b u il d th eir

.

o w n st or a ge h o u s e s o r r e m a i n d e pe n d e n t u p o n t h e m e r
ch a n t s a n d co tt o n f a ct or s It wo u l d s ee m a l s o th at t he
.

m ill s a n d trad e in ge n e ral sh o u l d e n co u ra ge t h e pr e s erv a

tio n of cott o n by s t or age b y d i s cri m inatin g ind ivi d u al ly
“
a ga in s t co u n try d a m a ge d co tt o n T h i s wo u l d p u t a
.

pr e m i u m o n co tt o n in goo d con d iti o n an d wo u l d th u s t e nd

t o e n co u r a ge s t o rage .

It h a s b e en st at ed tha t in t h e a ggr egat e s t orage ca p a city

pre s en t f a ciliti e s a r e am p l e b u t t h e wa r eh o u s es a r e n o t
pro p erly d i s tri b u t ed . T h e i n v e s ti gati o n sh owe d t h a t in
m any p l a ces in ev ery St at e i n cl u d i n g t h o s e with t h e gr e at e s t
,

n u m b er o f wa r eh o u s e s tho u s and s of b ale s o f cott o n a r e

,
“ ”
st ored o n t h e stre et s an d p la tform s o r l eft ab o u t gi n s
,

a n d f a rm s whil e a ll t h e war eh o u s e s in u s e a r e fill e d t o t h e ir

,

gre at es t ca pa city . In o th er s e cti ons o f t he s am e St at e ,

frequ ently in t h e s am e co u nty wa r eho u s e s wer e fo u n d th a t

,

a r e u s ed v ery littl e . This ind i cat e s that v ery p oor j u d gm e nt

has b e e n e x er ci s e d in t h e l o ca ti o n O f s t orage h o u s es a n d th at
tho s e w ho h ave cott o n t o b e prot ect ed can n ot get t he servi ce
whi ch m i ght b e e x pect ed .

D is cu ss th e p ro p o s ed s o l u ti o n fr o m th e st a n dp o int
o f W a tkins C o m p a ny a fir m o f c o tt o n m er ch a nts th a t
s en d s its b u yers t o th e l o ca l m ar k ets in th e So u th a n d
m a int ains s a l e s O ffi ce s i n v a ri ou s c o tt o n m a nu fa ct ur in g
d istri cts in th e U n it e d St a t e s a n d E u r o p e .
178 MARK E TIN G PR O BLE M S
111 . U N I O N W A R E H O U S E C O R P O R AT I O N
I n 1 9 1 9 it w a s a nn o u n ce d th a t t h e Uni o n W ar e
,

h ou s e C o rp o r a ti o n w a s b e ing o rga ni z ed f or h an d lin g

r a w c o tt o n I t w a s to h av e
. cap it a l st o ck .

T h e p u r p o s e wa s t o p u r ch a s e l ea s e a n d o th e rwis e, ,

a c q u ir e e xistin g w a r e h o u s es r em o d e li n g th em a n d
, ,

a ls o t o e r e ct s u ch str u c t u r e s a t i m p o rt a nt n o rth e rn

a n d s ou th e rn p o ints f o r t h e st o r a ge o f c o tt o n I t was .

a nti ci p a t e d th a t t h e co rp o r a ti o n w ou l d e n ga ge e v e n

tu a lly in c o m p r essin g b a lin g b a n d in g a n d c o v e rin g

, , ,

c o tt o n in a m a nn e r th a t w ou l d ins u r e a ga inst d am age

in tr a nsit .

T h e m a n agem e nt o f t h e com p a ny it was st a t e d , ,

w as t o b e in c o ntr o l o f a b o a r d o f d ir e ct o rs ch os e n fr om
th e v ari o u s br a n ch e s o f th e co tt o n in d u stry s o th a t
e v ery p h as e o f t h e in d u stry w ou l d h a v e o n e o r m or e

r ep r e s e nt a tiv e s th er eo n For th e m an agin g h ead a n

.
,

e x p e ri e n ce d c o tt o n w a r eh o u s em a n o f th e So u th w as t o

b e ch o s e n T h e h e ad qu art e rs o f th e c om p a ny w er e t o
.

b e in N ew Y o rk C ity .

All w ar eh ou s e s w e r e t o b e co nstru ct ed o n th e u ni t
”
syst em . E a ch u nit w ou l d b e cap a bl e o f st o rin g ab ou t
b a l e s Th u s th e w ar eh ou s e s c o u ld b e e xp a n d ed
.

a t a m inim u m c o st t o m e e t th e r e q u ir e m e nts o f f u t u r e

gro wth . T h e c o tt o n w a s t o b e st o r ed in th em s o a s
t o s e cu r e t h e l o w e st r a t e o f ins u ra n ce I n ge n er al th e
.

w a r eh ou s es w er e t o b e co nstru ct ed a n d o p er a t ed it ,

w a s s a i d s o th a t th e r ece i p ts iss u e d f or go o d s st o r e d
,

th er ein w ou l d b e p rim e e vi d e n ce o f o wn ershi p w e i ght , ,

g r a d e
, a n d d e li v e r a bi l ity an d w ou l d b e a cce p t e d as

co ll a t e ra l a t a ll b ank s th a t m ad e a p ra c ti ce o f l o ani n g

m o n e y o n co tt o n N ego ti ati o ns w er e o n f o o t f u rth er

.
,

m o r e with B ritish b an ks an d b u y e rs o f c o tt o n t o th e
,

e n d th a t r e ce i p ts f o r go o d s st o r e d in o n e o f th e w a r e

h ou s e s o f th e Uni o n W a r eh ou s e C o rp o ra ti o n w o u l d b e
a c cep t a ble as c o ll a t e r a l in E n gl a n d at b ank s th u s ,

fa cil it atin g e x p o rt tra ns a cti o ns .

I t w a s st at ed th a t thi s p r om is e d to b e o n e o f th e
l a rge st co tt o n w ar eh o u s e co m p a ni e s in th e w o rl d I t .

w as p r o p o s e d t o st a rt wi th a n i n iti al cap a city o f

b a l e s o f whi ch b al es w er e t o b e in
 MAT E RIAL S AN D E QUI PM E NT 1 79

ex ist in g w ar eh o u s e s th a t w er e t o b e p ur ch as ed T h e .

u l ti m a t e ca p a c ity w a s t o b e a b o u t b al e s .

P o ints a t whic h e v e nt u a lly t h e co rp o r a ti o n p l a nn e d t o

e st a blish w a r eh o u s e s w er e as f o ll o ws :

D alla s or Fo r t Wo rth ,
T e x as
Waco T exas
,

Ho u s to n o r T e xas C it y, T e xa s
Oklah o m a C ity or M u sk o gee , O kla .

Lit tle R ock o r Pin e Blu ff , Ar k

C lark s d ale , G r e e n v il le , R ose d a le ,
G r een wo od , M iss iss ipp i .

M em ph is , T e n n essee
M o n tg o m er y o r Bi rmi n gh a m , Ala
M o b ile , Alab am a
Sav a n n ah o r Br u n s w ick , G e o r gi a
G r ee n v il le o r C o lu m b ia , S C . .

P r ov id en ce , R h o d e I s la n d .

Fall R iv e r , M a ss ach u se tts .

Fr amin gh am o r M ans field , M ass

Wh at a d v a nt age s in this p l a n w o u l d p r o b ably co n

trib u t e t o th e s u cce ss o f th e u n d ert ak in g? Wh a t w e re
t h e o bst a cl e s t o b e o v er co m e ?

1 12 . C E N TR A L B I LL OF L AD I N G B UR E A U
If a f a rm e r d e ci d es to h o l d his co tt o n b e f or e s elli n g
it h e m ay p u t it int o a l o ca l w a r eh ou s e p r o vi d ed o n e
, ,

is a v a il a bl e a n d with th e w ar e h o u s e r ece i p t as s e cu rity

,

o bt a in a l oa n fr o m a l o ca l b a nk Wh e n a m er ch a nt
.

b u ys co tt o n fr o m f a rm e rs h e o r d in arily p l ace s it in a
,

w a r eh o u s e i f it is n o t t o b e shi p p ed i m m e d i at e ly a n d
, ,

u s e s t h e w ar eh o u s e certifi ca t e s a s s e cu rity f o r a l o a n .

Wh e n s hi p m e nt is m ad e t h e r a ilr o a d bill o f l adi n g

,

t a k es t h e p l ace o f t h e w a reh o u s e r e ce i p t a s t h e s e cu rity

f o r th e l o a n T h e m o v e m e nt o f t h e c o tt o n c r o p is
.
1 80 MARK E TIN G PR O BL E M S
l argely fin a n ce d by m ea ns o f b ank l oa ns s ecu r e d by
wa r eh ou s e certifi ca t e s o r r a ilro a d bills o f l a d in g .

T h e m e th o d o f fin a n cin g f o r ei gn shi p m e nts w as

bri e fly d es crib ed as f o ll ows in a n arti cl e in th e R a i lway
A ge Gaz ette .
1

Whe n th e cott o n arrive s at t he com pr ess e s in m any ,

ca s e s own e d b y t h e r a ilway s t h e l o ca l b ill s o f l a d i n g a r e o r

, ,

sho u l d b e s u rrend ere d in e x chan ge f or com pre ss r e ce i pt s

, ,

whi ch a r e in tu rn e x changed f o r f o rei gn o rd er b ill s o f l a d i n g -

d rawn t o t h e or d er o f t h e co tt o n s h i p p ing fir m a n d calli n g

f or t h e shi pm en t o f t h e co tt o n t o Liver p o o l or s om e o t h er
f o r ei gn city Th es e b ills o f la d in g a r e att a ch ed t o a d r aft
.

d r awn by t h e co tt on shi pping fir m o n a Liv er poo l b ank f or ,

i n s tan ce an d this d raft with it s b ill s o f la d i n g i s in t u rn

,

a tt a ch e d t o a b ill o f e x ch ange o n N ew Y o rk o n whi ch t h e

l o ca l Te x a s o r Mi ss i ss i ppi b an k a d va n ce s m o n ey t o t h e
c o tt o n s hi p p i n g fir m The s e t w o d raft s t h e o n e d ra wn o n
.
,

N ew Y o rk b ei n g in d or sed by t h e l o ca l b ank a r e s e nt t o ,

t h e l o ca l b a n k s corre s p o nd e n t in N ew Y ork C ity wher e t h e

’
,

N ew Y o rk b a n k p ay s it s co rr e s po n d ent s d raf t Thi s cl o s e s ’

.

t h e tr an s a cti o n a s f a r a s t h e l o ca l b ank i s co n cern ed ; it s

li ab ility h as b een ca n ce ll ed a n d it h as r ece ive d t h e m o ney
t h at it a d va nce d t o t he cott o n shi p p er T h e N ew York b an k .

i s n o w in t h e p o s iti o n o f havi n g a dvance d t h e m o ney to t h e

c o tt o n s hi pp e r d ir e ct a n d h o l d s a s s e cu rity a d r a f t o n a
,

Liver po o l b ank with b ill s o f l ad in g a tt ach ed It then shi p s .

t h e d r af t s with t h e b ill s o f l a d i n g t o Liv er po o l a n d wh en t h e ,

Liver po o l fir m h as a ccept e d t h e d raf t t h e N ew Y ork b a nk s ’

li ab ility d o e s n o t ce as e It s im ply h as t h e a dd e d pr ot ecti o n

.

o f t h e f or ei gn b ank e r s a cce pt a n ce Bu t b e twe e n t h e ti m e

’
.

that t he N ew York b an k h a s pa i d it s corre s p o n d en t s d ra ft ’

a n d t h e ti m e th at t h e Liv er p o o l b a n k a cce p t s t h e d r a f t
d rawn o n it b y t h e co tt o n shi pp er t h e N e w Y o rk b an k i s
re s po n s ib le f o r t h e e ntir e am o u n t that h as b ee n a d van ce d ,

a n d h a s a s it s o n ly s e cu rity t h e b ill s o f l a d i n g T h e d iffi .

c u lty a t p r e s en t i s th a t in t h e fir s t p l a ce t he N ew Y o rk
, ,

b an k s d o n t wan t t o a c ce p t thi s r e s p o ns i b ility a n d in t h e

’
, ,

s e con d p l a ce t h e f or ei gn b a n k e r s have b e co m e s o s u s p i ci o u s
,

o f t h e ge n u i n e n e ss o f t h e b ill s o f l a d i n g th at th ey r e f u s e t o
a cce p t d r af t s u n l e ss t h e Am eri ca n b an k ers will virt u a lly

g u arant e e t h e ge n u in en e ss o f th e s e b ill s .

T h e di ffi cu lty r e ferr ed to in th e l att er p art o f this

q u o t ati o n ar o s e fr o m the s o ca ll ed K ni ght Y a n ce y - -

1
Ra i lwa y A ge Ga zette July 15 19 1 0 p 1 1 9 Se e al s o J J Ar n old
, , ,
. . . .
,

o f C o tt o A n n a ls f A me ri ca n A ca dem y of S ocia l and

”
Fi a n ci
n a n, o
P oli ti ca l ci en ce Se pt em b e r 1 9 1 1
, ,
.
 MATE RIAL S AN D E QUI PM E NT 18 1

s
ca e 1 . This fir m o f c o tt o n m er ch a nts fail e d A p ril 20t h ,

1 9 1 0 with li a biliti e s O f o v e r
, a n d a ss ets o f

I t w as st a t e d a t t h e ti m e th a t this fir m
h ad o p er at ed by m ea n s o f s p u ri o u s bills o f l ad in g .

A sp u ri ou s bill o f l ad in g w as u s ed a s a m ea ns o f o bt a in
in g m o n e y with whi ch t h e fir m w e nt o u t a n d b o u gh t
co tt o n T h e co tt o n w as th e n shi p p e d fo r d e liv e ry o n
.

th e f o r ge d bill o f l a d in g T h e fir m e xt e n d e d its o pe r a
.

ti o ns h o we v e r u ntil ins o lv en cy r es u lt ed a n d th e
, , ,

E n glish b a n ks whi ch h el d d r a fts s e cu r e d by th e s e

s p u ri ou s bills o f la d in g w er e s a i d to h a v e s uff ered
h e avy l o ss e s .

I n A p ril 1 9 1 1 a p la n w as a d o p t e d to p r e v e n t if
, , ,

p o ssibl e t h e ,
r e cu rr e n ce o f t h e u se o f s p ur i ou s bil ls o f

l ad in g This p l a n p ro vi d e d f o r th e e st abli s hm e nt in
.

N ew Y o rk o f a C e ntr a l B u r eau t o whi ch a ll a d vi ce s o f

bills o f l a di n g issu ed w er e to b e s e nt T h e C entra l .

B u r eau w as o p e n e d Sep t em b er l s t 1 9 1 1 A c co r din g ,

.

t o th e p l a n th e shi pp e r r ece iv e d th e bill o f l ad in g with

,

a v a li d a ti o n ce rtifi ca t e a tt ach ed T h e r a ilr o a d a ge nt

.

fo rw ar d e d t o th e C e ntr a l B ur ea u a si gn ed cop y o f th e
bill o f l adi n g a n d a d u pli ca t e v a li d ati o n certifi ca t e .

T h e r a ilr o ad a ge nt s e nt to t h e au d it o r o f his r a ilr o a d

a tri p li ca t e v a li d a ti o n c e rtifi ca t e T h e C e ntr a l B u r eau
.

fil e d th e bill o f l a d in g by th e r a i lr oa d t o wn an d n um , ,

b er a n d n o tifi e d th e r ailr o a d th a t it h ad r e ce iv e d a
,

co p y o f th e bill O f l a d in g T h e shi p p e r fill e d o u t a

.

bl ank t o b e s ent t o th e C e ntra l B u r eau by th e b u ye r

o f t h e bill o f e x ch a n ge T h e m a st e r r e ce i p ts iss u ed by
.

st eam shi p c om p a ni es w er e s e nt t o th e C e ntr al B u r eau

t o co m p l e t e th e file T h e C e ntr a l B ur eau w as t o giv e
.

no ti ce wh e n fr a u d w as d e t ect e d O n e h u n dr e d an d .

sixt een r a ilr o a d s si gn ed th e agr eem e nt with th e C entra l

B u r eau a n d th e b ank ers a ss o ci a ti o n I t w a s ex p e c t e d
’
.

th at t h e co nst a nt s cr u tiny o f th e bills o f l a d in g fo r

w ard e d t o th e C entr a l B u reau a n d th e ch eckin g u p o f
in accur a ci e s with th e r ailr o a d s w o u l d p r e ve nt f u rth e r
u s e o f s p u ri ou s bills o f l a d in g This C e ntr a l B u r e a u
.

N o t es o n t h is c as e w e re giv e n i n t he c urr e n t iss u es o f t he C m

1 o

m er ci a l a d Fi na ncia l C hr on i c
n
1 82 MARK E TIN G PR O BLE M S
w as to be o p e a edr t by E u r o p ea n d e al ers at th e ir
e x p e ns e 1 .

I n Sep t em b er 1 9 1 3 it w as st a t e d tha t v e ry littl e

, ,

a tt e nti o n w a s b e in g p a i d t o t h e B u r e au by th e f o r e i gn

e x ch a n ge b a nk e rs a n d br o k e rs int er e st e d in c o tt o n

bills o f l ad in g I t w as st a t ed fu rth e r th a t o nly tw o t o

.

fiv e p er ce nt o f th e t o t a l bills iss u e d w e r e th u s v e rifi ed .

Ho w is this t o b e exp l ain ed ?

1 13 . E M E R SO N C O M P AN Y USE —
OF NEw Y ORK
C O T T O N E XCHAN GE
E m e rs o n C om p any , co tt o n m e r ch ants in Bo st o n ,
a ccep t a n o r d e r fr o m a m a n u f a ct u r e r f o r b a l es
o f o n e in ch T e x a s m i d d lin g co tt o n a t a s p e cifi e d p ri ce
-
.

Sh o u l d E m ers o n C o m p a ny u se th e N ew Y o rk C o tt o n
E x ch an ge in co nn ecti o n with t hi s tra ns acti o n ?

1 14 . SE B A G O M I LL S —
H E DG I N G
T h e Seb a go M ills a co tt o n m a nu fa ct ur in g com
,

p a ny with a l ar ge p l a nt l o ca t ed in N ew H am p shi r e
b u y th eir s u pp ly o f co tt o n d u rin g th e s ea s o n a s c o n d i
ti o ns in th e r aw c o tt o n m ark e t s e em t o w arra nt I f .

th e p u r ch a s es o f r aw m at eri al d ur in g t h e s ea s o n ar e n o t
a d j u st e d c l o s e ly t o th e cu rr e nt m a n u f a ct u rin g r e qui r e

m e nts o f th e m i lls h ow can thi s com p a ny h e d ge its

,

p u r c h a s e s ? W h y is h e d in
g g n o t c o mm o nl y p racti ce d
by c o tt o n m ills ?
1 C o m mer i a l a n d Fina n ci al C h ron ical Se t em b e r 20 19 1 3
c p , p 778
, , . .
 MAT E RIAL S AN D E QUI PM E NT 1 83

1 15 . L O N G YE AR B LA CK —
FI N AN C I N G C O TT O N
I N ST O R A G E
L o n gyear B l ack e x po rt m er ch a nts b u y , ,

b al es O f m i d d lin g c o tt o n in G e o r gi a in N o v e m b e r .

This c o tt o n is shi p p e d t o Sa v ann a h a n d st o r e d th er e .

T O fin a n ce th e ir o p e r a ti o ns th e s e m e r ch a nts s e e k a ,

l o an fr o m a b a nk with t h e w ar eh o u s e r e cei p t a s s e cu rit y

H o w will t h e v a l u e o f this s e cu rity b e a ff ec t ed if t h e
ro tt o n is h e d ge d ?

1 16 . N AN T U C K E T C O M PAN Y —
M A R K E T I N FO R M A T I O N
T h e N a nt u ck e t C o m p a ny o p e r a t e s a m ill o f
s p in d l e s i n N ew B e d f o r d , M a ss a ch u s e tts I t m a n u .

f act u r e s fin e whit e go o d s , u sin g hi gh gr a d e , in ch an d - -

a q u a rt e r co tt o n
-
Wh a t info r m a ti o n d o e s th e Tr ea su r e r
.

o f this m ill n ee d t o gu i d e h im in p u r ch a sin g his r aw

m at e ri a l ? Wh en d o es h e n eed this inf orm a ti o n ?

1 17 . B O S T O N W O O L M AR K E T
T he nn u a l p ro d u cti o n o f r a w w o o l in t h e Unit e d
a l

S t a t e s in r e ce nt y e ar s h a s b ee n a b o u t
p ou n ds Thi s is a b o u t 1 0% o f t h e t o t a l w o rl d p ro
.

d u ctio n T h e d o m esti c p r o d u cti o n o f r aw w oo l is

.

1
Fo r a d di t io al i nf o r m a t io n o n t he r a w w oo l tr a d e s ee P T
n ,
. .

C h er i t o n Th e Wool I d u try ; al s o F R M a rs h al l a n d L L He lle r

n ,
n s . . . .
,

T he Woo l G r o we r a n d t he Woo l T r a d e U S D pa rt me nt of A gr v
“
, . . e

cu lt u r e B ullet N o 206 a n d B ulleti n of the N atio nal A ss ocw t ion of

in

Wool Ma n uf ac tu rers
.
,
.
1 84 MARK E TIN G PR O BL E M S
a b t
ou h a lf o f t h e d o m esti c c o ns u m p ti o n in th e
o n e-

Unit ed St a t es O v e r o n e h a lf o f th e a nn u a l cli p in th e
.
-

Unit ed St a t e s is gro wn in th e f ar W est z Wy o m in g —

,

M o nt a n a I d ah o N ew M e xi co O r ego n C a lifo rni a

, , , , ,

Uta h C o l o r a d o N e v a d a Ariz o n a T h e w o o l gr o wn
, , ,
.

in this s ecti o n is kn o wn a s t errit o ry w o o l I t is t h e .

p r o d u c t o f a s p e ci a li z e d in d u stry T h e siz e o f th e .

a v e r a ge fl o ck o f sh eep in this s ecti o n is a b ou t

Th e r e a r e n u m er ou s inst a n ces h o w e v e r o f l arge r

, ,

fl o cks o f a n d e v e n u p to sh e ep .

I n th e M i dd l e W e st c e nt erin g a rou n d O hi o is
, ,

a n o th e r w o o l gr o win g r egi o n T h e p r o d u ct O f this

.

s e cti o n is kn o wn as fl e ece w o o l H e r e w o o l gr owin g

.

is in ci d e nt a l t o ge n era l f a rm ing Th e a v erage siz e o f a

.

fl o ck in th e fl ee ce w o o l d istri c t is u n d e r 50 T h e fl ee ce .

w o o l is o f d iff er ent gr ad e an d is u s e d for d i ff e r e nt

u
p p r o s e s th a n t h e t e rrit o ri a l w o o l .

I n each d istri c t th e q u a lity O f w o o l fr o m th e s am e

fl o ck v a ri es fr om s e as o n to s ea so n acco r d in g t o w eath e r
,

a n d f ee d co n d iti o ns .

I n a sin gl e fl ee ce f u rth e rm or e th er e ar e s ev e ra l
, ,

q u aliti e s o f w oo l an d a wi d e v a ri a ti o n in th e l en gth
o f th e fib e r in d i ff e r e nt p a rts O f th e fl ee ce An o th e r .

p e cu li arity o f th e w o o l tr a d e is th e shrink age th a t

t ak e s p l a ce b e fo r e m a nu fa ct u rin g Som e fl eece s Shr ink
.

50% o f th e ir o ri gin a l w e i ght ; o th e rs a s hi gh as

T h is shrink a ge is th e r e su lt of th e extra cti o n o f th e
a nim a l f a t o r gr e a s e fr o m th e fib e r .

I n th e t errit o ri a l wo o l d istri ct th e w oo l is o r d in arily

s o l d i mm ed i a t e ly a ft e r sh e a rin g I t is h au l e d by th e
.

g r o w e r t o t h e s hi p p in g p o int s u ,
ch a s B illi n gs M o n ,

t a n a G r ea t Fa lls R awlins Ph o en ix a n d sim i l a r p o ints

, , , ,
.

A t th e s e t o wns b u y e rs em p l o y e d by w o o l m e r ch a nts
in B o st o n a n d Phil a d e lp hi a co n gr ega t e Th ey p u r .

c h a s e t h e w o o l o r d in a rily in t h e gr ea s e a ft e r insp e c ti o n .

I n s o m e inst a n c e s th e w o o l is s o l d o n a s co u r ed b asis ,

in whi ch ca s e th e gr o w e r a ssu m e s th e risk a tt en d a nt

u p o n t h e u n cert a inty a s t o th e d egr e e o f shrink age .

T h e gr o w e r is p a i d ca sh by th e m e r ch a nt .

Fr o m t h e m a rk e t p o ints in th e Fa r W e st th e w o o l ,

is shi pp e d im m e d i a t ely t o th e w o o l m er ch a nts in th e

 MATE RIAL S AN D E QUI PM E NT 1 85

E a st , w h o m a int a in l a r ge w a r eh o u s e s f o r t h e st o r a ge
o f th e ir p u r ch a s es . T h e w o o l m e r ch a nts cl a ssify a n d
gr a d e th e w o o l in th e ir w a r eh o u s es .

T h e tr a d e in fl ee c e w o o l is c a rri e d o n si m i l a rly ,
e x cep t th a t a l a r ge p o rti o n o f th e fl ee ce w o o l is s o l d

by th e gr o we rs to c ou nt r y m e r ch a nts , e ith e r ge n e ra l
st o r ek e ep e rs o r l o ca l w o o l m e r ch a nts , w h o in t u rn s ell
t o t h e b u y e rs fr o m t h e E as t e rn w oo l h o u s e s .

I n s o m e y ea rs wh e n t h e p ri ce s O ff e r e d a t th e c o u ntry
p o ints , e ith e r in th e t e r rit o ri a l d istri ct o r in t h e fl e ece
w o o l d istri ct , d o n o t s e em s atisf act o ry t o th e gr o w e rs ,
th e w o o l is co nsi gn e d t o m e r ch a nts o r c o mm issi o n
h o u s e s in th e E a st to b e h e l d u ntil th e gr o w e rs giv e
instru cti o ns f o r its s a l e .

Why d o es th e w o o l m a rk e t ce nt e r a t B o st o n ?

1 18 . E AR LY C O N TR AC T I N G IN WO O L T R AD E
I n s o m e s ea s o ns n u m e r o u s w o o l m e r ch a nts a d o p t
a p o li cy o f c o ntr a c tin g with gr o w e rs s e v e r a l m o nths
b e fo r e sh ea rin g u s u a lly in th e f a ll o r e arly wint e r fo r
, ,

th e c li p o f t h e f o ll o win g s p rin g s e as o n This is s o m e

.

”
“
t im e s c a ll e d b u yin g o n t h e b a ck I n a tr a d e r e p o rt
.

u blish e d in B o st on N o v em b er 1 9 1 9 th e f o ll o win g
p , , ,

st a t em e nt w a s m a d e :
A d a n ger i s t hat t h e s car city a n d t he a b n orm al pri ce s
that a r e b e i n g p ai d in t hi s m a r k e t m ay l ea d t o pre m at u re
con tr ac ti n g o f t h e c o m i n g t e rrit o ri a l c li p C o
. n t r a c ti n g w a s

very h eavy in t h e l a s t t w o m o n th s o f 1 9 1 6 a n d in a t l e as t
o n e r e c e n t ye a r t h e e n d o f O ct o b e r h as s ee n a fa ir pe r c e n t a ge
 1 86 MARK E TIN G PR O BL E M S
of t he t errit ori al cli p invo lved C o n servative wo o l
. m en
a lways ha v e d e pr ecat ed thi s e ar ly co ntr a cting a n d un
d o u b t ed ly will co nti n u e t o d o s o .

Why sh ou l d this p racti ce be d ep re cat ed ?

1 19 . P E JE P S C O T M AN U FA C T U R I N G C O MPAN Y —
WO O L
A U CT I ON S
T h e Lo n d o n W oo l A u cti o ns ar e o n e o f th e p r o m
in en t instit u ti o ns in th e w o o l tr a d e o f th e w or ld l .

Th es e au cti o ns h a v e b ee n in r egu l a r op er a ti o n f or a
p eri o d O f e i ghty fiv e y ears O r d in a rily th e r e ar e six
-
.

s e ri e s o f s a le s e a ch y ear J a nu ary M ar ch M ay J u ly
—
, , , ,

Sep t em b e r an d N o v em b er
,
.

T h e w o o l th a t is off e r e d f o r s a l e a t th e s e au cti o ns
is E n glish C o l o n i al w o o l A u str a li a n w o o l p r e d om in at
,

in g . N O d om e sti c w oo l a n d n o So u th Am eri ca n w oo l
is s o l d at th e s e L o n d o n a u cti o ns T h e w o o l th at is
.

s o l d is o r d in arily co nsi gn e d t o th e o r d e r o f fin a n ci a l
h ou s es in L o n d o n w h o h a v e m a d e a d v a n ces t o th e
,

gr o w e rs . T h e shi p p in g f aciliti e s o f L o n d o n h a v e b ee n
o n e o f th e r e a s o ns f o r t h e d e v e l o p m e nt o f this b u sin e ss .

Fo r a p eri o d o f a t l ea st t e n y ea rs b e f o r e th e w ar ,

th e qu a ntity o f w o o l s o l d a t th e L o n d o n a u cti o ns h ad
b een p r acti ca lly c o nst a nt in th e n ei ghb o rh o o d o f
,

to b al e s p er y ear D u rin g this t im e

.

th e e xp o rts o f w oo l fr o m A u str a li a a n d So u th Afri ca

h ad h ea vily in cr ea s ed b u t with th e in cr ea s e in th e
,

v o lu m e o f exp o rts th er e h ad a ls o d e ve l op e d m o r e d ir e ct
T he b est d es cr i pt io n o f th e Lo n d o n Wool Au ct io ns is giv en i n
1

J H C laph am Wooll en a n d Wo rs ted I n d us tr i es pp 90 98

. .
, , .
— .
 MATE RIALS AN D E QUI PM E NT 1 87

b u yin g in the C o l o ni a l m ark e ts by E n glish w o o l fir m s

an d e sp eci a lly by w o o l m e r ch a nts a n d m an u f a ct ur ers
o f th e co ntin e nt a l co u ntri e s o f E ur o p e .

Th e s e au cti o ns a r e a tt en d ed by r ep r es e nt a tiv e s o f
E n glish w o o l m e r ch a nts C o ntin ent al w o o l m er ch a nts
, ,

an d Am eri ca n w o o l m er ch a nts a n d m a n u f a ct u r e rs .

Th e y ar e o p en t o a ny o n e wh o wish e s t o b u y T h e .

p r o s p e ctiv e b u y e rs l o o k o v e r th e c a t al o gu e s o f s am p l e s
th a t ar e p r e p ar e d by th e s e llin g br o k e rs . Th es e
insp e cti ons o f th e s am p l e s ar e in d is p e ns abl e . At
th es e a u cti o ns th e bi d d in g is t o s o m e ext e nt by w o o l
m e r ch ants a n d m a n u f a ct u r e rs p e rs o n a lly b u t m o r e
,

fr e q u e ntly th e ir bi d s a r e m a d e thr o u gh b u yin g br o k ers .

T h e b u yin g br o k e rs a r e e m p l o y e d e s p e ci a lly by th o s e
b u y ers w h o d o n o t p u r ch a s e in v e ry l ar ge q u a ntiti e s .

T h e b u yin g br ok er r ece iv e s a co mm i ssi o n O f T he

t erm s ar e ca sh P a ym e nt is t o b e m ad e within s ev e n
.

d a ys , an d th e w o o l m u st b e r em o v ed fr o m th e w ar e
h ou s e within a w eek .

I t h as b ee n p ro p o s ed fr om ti m e to t i m e th a t a
sim i la r instit u ti o n sh ou l d b e e st ablish ed in B o st o n ,

in o r d e r to giv e th a t city gr eat e r em in e n ce in th e w o o l

tra d e o f th e w o rl d Wh a t a ttit u d e t o w ard this pr o
.

p o s a l sh o u l d b e t a k e n by t h e p r e si d e nt o f t h e P e j e p s co t
d
M a n u fa ct u rin g C o m p any l o ca t e in M a s h s tts s a c u e ?

T h e c om p a ny p u r ch a s e s l a r ge q u antiti e s o f d o m esti c
a n d f o r e i gn w o o l O f A u str a li a n gr ad e thr ou gh th e

r egu l ar ch an n els .
188 MARK E TIN G PR OBL E M S
1 20 . C ATT LE LOAN C O M P A N I E S
T h e b ee f s u pp ly of th e
Unit ed St at e s c om es fro m
t wo m ai n s o u r c es : ( 1 ) d airy ca ttl e ; ( 2) r a n ge a n d
r a n ch ttl eca .

D airy c attl e a r e in p a rt sl au ght er ed by l o ca l b u t ch

er s a n d th e b e e f is s o l d l o ca lly o r shi pp e d t o n ea rby
,

m ark e ts I n s o m e d istri cts e sp eci ally in th e M i dd l e

.
,

W e st d airy ca ttl e a r e s o l d by th e f a rm ers t o l o ca l

,

shipp ers f or shi p m ent to th e l ar ge p rim ary m ark e ts .

D ur in g t h e l ast f ew y ears s e v er a l h u n dr ed co op era tiv e

li v e st o ck shi pp ing a ss o ci ati o ns h a v e b een o rga ni z e d
-

in th e M i d d l e W e st in co m p etiti o n with t h e l o cal

,

s hip p er s l .

A l arge p o rti o n o f th e s u pp ly o f ca ttle for th e b ig

p a cki ng p l a nts a t th e p rim a ry m ark e ts is fu rnish e d by
r a nge a n d r a n ch ca ttl e Th es e c a ttl e ar e ra is ed by
.

fa rm e rs wh o s p eci a liz e in thi s b u sin ess I n th e m ar .

k e ting o f th e s e ca ttl e fre qu ently th e r e ar e s e ve r a l

,

st ep s I n no rm al yea rs f o r e x am p l e l a rge nu m b ers o f

.
, ,

y ou ng cattl e in T e x as a r e s o l d f or ship m ent t o th e

r a n ges in th e n o rthw est ern st a t e s s u ch as M o nt a n a ,

a n d th e D a k o t a s O th e r T e x a s ca ttl e a r e s o l d t o th e
.

l o cal p ack in g p la nts f or shi p m ent t o th e co rn b e lt o r

, ,

t o t h e p rim a ry m a rk e ts in th e M i d d l e We st C a ttl e .

th at h av e b e en ra is e d o r gra ss fed o n th e n o rt h ern -

ra nge s ar e S hip p ed u s u a lly in th e f a ll to th e p rim ary

m ark e ts Som e o f th o s e whi ch ar e s hi pp ed t o t h e
.

p r im a ry m a rk e ts a r e s o l d th e r e t o f e e d e rs a n d r e shi pp e d
to th e f ee d in g p e ns in th e c o rn b e lt f o r fu rth e r f att e n
in g . Th es e shi p m ents fr o m th e r a n ch e s a n d r a n ge s
are c o mm o nly in tr a in l oa d s I t is a b u lk b u sin ess
. .

T h e f a rm ers a n d ca ttl em e n wh o b u y c a ttl e f o r

f eed in g in th e corn b elt k eep th e ca ttl e in th e ir p o ss es
si o n d u ring t h ree o r fo u r m o nths in th e wint er a n d
sp rin g in o r d er to p r ep ar e th em fo r m ark e t T he .

f ee d in g d istri ct is in th e l o ca liti e s wh e r e a l ar ge s u pp ly
o f co rn is gr o wn an d in f airly c l o s e p ro ximi ty t o t h e

p rim ary m a rk ets .

S Dep artmen t of Agr icu ltu r e, Farme r s

U u
B ll eti n N o
’
1
. . . 7 1 8,
C oo pe r at ive L iv e S t ock S hi ppin g As s o ciat io ns
”
.
 MATE RIALS AN D E QUIPM E NT 1 89

T h e p r ii n ar y m ar k ets for ca ttl e ar e th e f o llo w in g :

l

R E CE I P T S AN D D I S P O S I TI O N OF C AT T L E AT
P UB LI C ST O CK YA R D S 1 9 1 9 ,

T he ttl e ar e shi pp ed to th es e p ri m a ry m ark ets

ca

by th eir o wne rs o n c o nsi gn m e nt in car l o ts t o co m

m issi o n m en I n t h e st o ckya r d s a t t h e p rim a ry m a rk e ts
.

a ll s a l e s a r e m a d e by th e co m mi ssi o n m e n t o wh o m t h e

ca ttl e h a v e b ee n co nsi gn e d T h e r a t e o f co mm iss i o n

.

is fix ed by th e l o ca l a ss o ci a ti o n o f whi ch th ey ar e
m em b ers .T h e ca ttl e a r e s o l d by p u bli c au cti o n in
th e st o ckyar d s u s u a lly within tw e nty f o u r h o u rs a ft er
,
-

a rriv a l T h e chi e f b u y ers o f ca ttl e a r e th e r ep r es ent a

.

tiv es o f th e l ar ge p a ckin g co m p a ni e s a n d t o s o m e
e xt e nt firm s o f e x p o rt e rs T h e c a ttl e a r e s o l d fo r c a sh
.

a n d a ft e r d e d u ctin g his c o mm issi o n a n d a n y in ci d e nt a l

,

e x p e ns e s th e c o m m issi o n m e r ch a nt r em its th e p r o cee d s

,

o f t h e s a l e im m ed i a t e ly t o th e ca ttl e shi pp e r .

T h e ca ttl e tr a d e is o n e in whi ch s p e ci a l m e th o d s o f
fin an cin g h a v e b ee n d e v e l o p e d O wn e rs o f ca ttl e .

th a t ar e n o t int e n d e d fo r e a rly shi p m ent o r th a t a r e to

b e k ep t o n t h e r a n ch fo r br e ed in g p u r p o se s o r fo r
gr owth b ef o r e m a rk e tin g fr e q u e ntly r e q u ir e l o a ns .

Th es e l oa ns a r e l o n g ti m e l o ans Th e y ar e m ad e by
-
.

l oca l b anks o r by in d ivi d u als a ctin g a s p riv a t e b a nk ers .

For fin a n cin g th e tr a d e i n b e e f cattl e whi ch a r e t o

b e f a tt e n e d o n t h e r an ge s o r in th e co rn b e lt a l ar ge ,

S D pa rtm t of A gri c ult u re T he Mar k e t Re po rte r

1 U “
. . e en , ,

Ja n u a ry 1 7 1 9 20 p 3 6
, ,
. .
1 90 MARK E TIN G PR OBLE M S
v o l u m e o f sh o rt ti m e l o ans is m ade each y ear Th es e
-
.

l o a ns u su a lly ar e f or a p e ri o d O f three to six m o nths .

T h e l oa ns ar e liqu i da t e d wh e n t h e cattl e a r e s o l d M any .

l o a ns o f this typ e ar e m a d e t o th e ca ttl e m e n by cattle

l o a n com p an ies l Th e r e a r e ca ttl e l o a n c om p ani e s with
.

h ea d qu art e rs in a ll th e p ri m a ry m ark ets T h e l ar gest .

o f th em ge n er a lly a r e a ffili at e d with l a r ge b a nks l o ca t ed

n ea r th e st o cky ar d s T h e ca ttl e l o a n co m p a ni e s a r e
.

o p er a t e d a s d istin ct co r p o r a ti o ns b u t in c l o s e c o o p er a ,

ti o n with th e b a nks C attl e l o a ns v a ry in siz e fr om .

$ 500 t o T h e a v er age l o a n is p r ob ably

to
T he st ep s t ak e n by a ca ttl e l o a n co m p any ar e as
fo llow s Z : A ft e r a n a pp li ca ti o n h as b e e n r ece iv e d th e ,

c a ttl e l o a n co m p a ny m a k e s a n inq u iry r ega r d in g th e

m o r a l h a z ar d ability ex p eri e n ce fin a n ci a l st a n d in g
, , , ,

a n d e q u i p m e nt o f th e p r o s p ectiv e b o rr o w e r T h e co m .

p a ny o r d in a rily r e q u ir e s a sw o rn st a t e m ent o f th e
b o rr o w e r s a ss e ts a n d li abiliti e s
’
.

A n ex p ert in th e e m p l o y o f th e cattl e l o an com p any

insp ects an d gr a d e s th e ca ttl e th a t ar e off er ed as
s e cu rity an d fu rnish e s a writt e n r ep o rt st atin g th e ,

br a n d s by whi ch th e cattl e ar e i d entifi ed I n p r ep arin g .

a r ep o rt o f this s o rt o n a l a r ge h er d e x p ert kn o wl ed ge ,

O f ca ttl e is e ss e nti a l .

A n inqu iry a ls o is m ad e r e gar di n g th e p r o sp e ctiv e

b o rr o w er s e qu i pm e nt o f f eed w a t er sh e lt er f e n ces
’
, , , ,

an d h el p .

A s ea r ch is m ad e O f r e co r d s in th e l o cality wh er e th e
ca ttl e ar e a n d a ce rtifi ca t e is s e cu r e d fr o m th e p r o p e r

o ffi ci a ls t o S h o w t o wh o m t h e titl e t o t h e c a ttl e b e l o n gs .

I f th e l oa n is gr a nt ed th e cattl e l oa n co m p a ny ,

t ak e s th e n o t e o f th e b o rr o w e r a t th e a gr eed r a t e o f
int er e st T he l oa n com p a ny th en o r d ina rily d is cou nts
.

t h e n o t e a t a b an k with th e ca ttl e l o a n co m p a ny s
’

e n d o rs em e nt .

C h ar le s S C ole , C a tt le Lo a n s a n d T h e ir V al u e t o I nv es t ors ,
1 “
.

U S Depa rtm en t of A gr i cu ltu r e , Yea r Book , 1 9 1 8 ; E M Lar ner ,

. . . .

Th e C att le Lo a n C o m pa n y , Jou rn a l of P oliti ca l E co n om y, O ct o b e r

“ ”

18 .

2
W B H ar r is
. . on ,
“
Facts ab ou t C att le Lo ans , S ucces sf u l Ba n ki ng,
Ju ne , 19 16 .
 MATE RIALS AN D E QUI PM E NT 19 1

T he f o ll owin g st a t em e nt s u m m ari z es th e p o li cy o f
th e c attl e l o a n c o m p a ni e s in r e ga r d t o t h e a m o u nt
th a t th ey len d l z

Ability t o ha n dle st o ck pro p erly a n d a dvan t age o u sly i s

e ss e nti a l if t h e s afe ty o f t h e l o a n i s n o t t o b e i m p a ir e d .

T h e gr owth a n d d e ve l o p m e n t o f s t o ck f u r ni she s a m a rgi n

O f s af e ty s i n c e t h i s i s d e p e n d e d u p o n t o car e f o r d e cli n e s
,

in t h e m ark et T h e co llat eral t a k e n i s s u ppo s e d t o b e

.

s u ffi ci e nt t o t ak e c are O f a n y n orm a l m ark e t fl u ct u ati o n s

a n d t h e gr owt h o f t h e s t o ck i s s u p p o s e d t o t a k e c a r e o f
u n u s u a l d e cli n es It i s a p par ent there for e tha t t he cattl e
.
, ,

m a n s a b i lity p ro p erly t o t ak e c ar e o f his s t o ck i s f u lly as

’

vi t a l a s t he co l la t era l h e o ff er s .

T h e a m o u n t l o an e d i s f ro m h al f t o f u ll val u e o f t h e s t o ck .

It is c u s t o m ary t o lo an from 7 5 t o 8 0% o f t he va l u e o f t h e
st o ck o n t h e gro u n d t h a t 20 t o 25 % i s a m pl e m a r gin f o r
s afety So m eti m e s e s p e ci ally in t he ca s e o f f e ed er s if t he
.
, ,

a p pli ca nt h a s a r e p u t ati o n f o r fi n i shi n g h is s t o ck f o r m ar k e t

an d h a s a m pl e f e e d h e ca n o b t a i n a l o a n e q u a l t o t h e m ar k e t
,

valu e o f his st o ck at t h e ti m e o f b o rrowi n g T h e co n diti o n .

o f t h e m ark e t h a s a b e ari n g u p o n t h e m ak i n g o f s u c h l o a n s .

Unli k e o th er c oll at e r al live s t o ck b eco m e s m o re val u a b l e

,

b y gr owt h a n d b y i n cr e as e B e ca u s e o f t h es e t w o fa ct o r s
.
,

t h e h a z ard s o f l o ani n g a r e gr e at ly r e d u ce d a n d t h e m ar gi n
requ ire d f or s afety n ee d n ot b e a s gre at a s t ha t o r d i n a r ily
r eq u ir e d in l o ans o n o t h er chatt el s T h e con s e r vative l o an
.

in g age n cy h owev er r e q u i r e s a s afe m argi n in a dd i ti o n t o

, ,

t h e f e e d o n h an d e x ce p t i n c a s e s w he r e t he a p pli ca n t s
’

fina n ci al ab ility j u sti fie s t he l oan o n gr o u n d s o t her t han t he

co ll at er al O ff e r ed .

How d o t h e m e th o d s o f s ellin g ca ttl e at t h e p r im a ry

m ark e ts a ff ec t t h e p o li ci es of a ca ttl e l o a n co m p a ny
in m akin g l o ans o n ca ttl e ?

C har les S C o le , C att le Lo a n s a n d T he ir V a l u e t o I n v e st ors

1 “
.
,

U S Depa rtme n t of Agr i cu lt u r e , Yea r Book , 1 9 1 8 p 5

. .
,
. .
192 MARK E TIN G PRO BLE M S
12 1 . W LLI I AM J ACK SON — SA L E OF C ATT L E
T he f o llo win g st a t em e nt w as ma d e by a st a t e
O ffi c i a l in T e x a s D e ce m b e r 1 9 1 9 1 :
, ,

We have been seeking f or s om e ti m e a practi cal m etho d

o f s elli n g live st o ck f or s l au ght er whi ch wo u l d e n ab l e t h e

pro d u ce r t o b e a party t o t h e s al e Un d er pre s ent m etho d s.

,

t h e gr o w er is c o m p e ll ed t o m ak e b lind co n s i gn m en t t o s om e
a gen cy at t h e s t o cky ar d s a n d t o s ell a l m o s t i m m e d i at ely
u p o n a rriv a l ; o r d o wo r s e b y h o l d i n g o v e r at l ar ge e x pen s e .

Ho w m any ti m e s wo u l d shi pp er s r ef u s e wh at th ey ar e com

p elled t o a cce pt co u l d th ey t u rn t h e s t o ck b a ck t o t h e r ange
,

o r f ee d i n g an d wait f o r a b e tt er o ff er ? U n d er t h e p r e s e n t
m e th o d p r a cti ca lly a ll m eat s t o ck b e com e s d istre s s e d t h e
,

m om ent it i s l o a d e d .

My co nvi ctio n i s that t h e peo pl e will either e st abli sh

coo p er a tive l o ca l s l a u ght er h o u s e s o r t h e p a ck er s will ,

e ve nt u a lly co n tr o l n o t o n ly t h e live s t o ck b u t a ll t h e p rim ary

n e ce ss iti e s O f li f e H o wever m y pu r po s e in thi s arti cle i s
.
,

t o s t art s o m e d i s cu ss i o n as t o m ean s o f a ss i s ting liv e st o ck

pr o d u cer s in a b s en ce o f t h e a b att o ir
, We ar e go ing t o .

co n s i d erab l e e x p en s e a n d tro u b l e t o i n s p ect live st o ck f or

t h e p u r p o s e of co ntr o lling or e ra d i cating com m u ni cab l e
d i s ea s e s ; why n ot go a st ep f u rther an d e s t ab li sh gr a d e s ,

an d h ave t h e i n s p e ct o r t o a l s o gr a d e t h e liv e st o ck with a

vi ew to s elli n g f o b ? Thi s wo u ld give t h e grower an
. . .

o pp ort u n ity t o h o l d b a ck his s h i pm e nt wh e n t h e pri ce d id

n ot s u it h im .

I re aliz e tha t s u ch p lan wo u ld ent ail som e troubl e a s t o

d eta il b u t t h e s am e i s tr u e o f every gr eat worth whi le
,

m ov em ent .

A n alyz e this st a t em e nt fr o m th e st an d p o int o f

Willi am J a cks o n th e o wn e r o f a , ac r e r a n ch -

in th e ce ntr a l p a rt o f T e x a s M r J a cks o n h as a b ou t . .

h ea d o f ca ttl e .

M on thly N ews B u lleti

1
Au st in T e xas Ja n u a ry 1 1 9 20
n, , , ,
.
 MATE RIAL S AN D E QUI P M E NT 1 93

122 . H I DE T R A D E
T h e fo ll o wi n g st at e m e nts ar e q u o t e d fro m a b u ll e tin
o f t h e Unit e d St a t e s D ep a rt m e nt o f Agr i cu ltu r e z
l

P acker hi d e s a n d s ki n s P a cker hi d e s an d ski n s a r e

—

t aken O ff in est ab li shm en t s wh ere t he s la u ght eri ng i s o f a

who le s al e ch ar acter a n d wh er e m en u s u ally ar e em ployed
,

e x cl u s ively f o r t h e p u r p o s e o f r em o v in g hi d e s I n t h e pl a n t s .

o f t h e l ar ge p ack e rs t h e l ab o r i s s o d ivi d e d th a t e ach wo rk e r

h as a p arti cu l ar t a sk t o p e rfo r m in whi ch h e b e co m es v e r y ,

p r o fi ci e n t S i n ce th
. e y a r e t a k e n o ff in l ar g e n u m b e r s t h e ,

hi d es a r e u n iform ly s e le ct e d a n d cu r ed a n d gen erally a r e ,

free fro m s alt s t a ins a n d e x ces s s alt o r p i ckl e T h e r e s u lt .

is a pro d u ct o f u n i f orm s ele cti o n o f go o d p att ern an d tri m , ,

an d with f e w i m p er f e cti o n s m aki n g p o ss i b l e a m a x i m u m

,

yield o f l eather o f t he b e s t q u ality .

C o u n try hi de s a n d ski n s C o u ntry hi d e s a n d ski n s a r e

—

t ak e n o ff b y far m ers ran chm en a n d l o ca l b u t chers o r by

,

their he l pers wh o gen erally ar e in ex peri en ced in skinning

,
.

“ ”
Thi s cl as sificati on in cl u d e s fall en hi d e s o r tho s e f rom ,

a n i m als th at h a v e d i ed f r om d i s eas e a cci d ent o r n at u r a l , ,

c a u s es a s we ll as th o s e f r om a n im a ls th a t h av e b e en s la u gh t
,

e r e d f o r fo o d C o u ntry hi d e s o ri ginat e in s m all n u m b er s

.
,

in s ca tt er ed a n d r em ot e s ecti on s o f t h e co u n try a n d s eld om ,

a r e tre at e d in a car ef u l a n d e ffi ci ent m an n er with r e s pe c t

t o skinn in g cu ring an d m arketin g
, ,
T h e r e s u lt f requ en tly .

i s a poo r prod u ct o f irregu lar p att ern a n d trim with m an y ,

i m perfectio ns ; s u ch hi d es an d ski n s a r e u s u ally han d l ed

s ever al tim e s b efor e b eing a vailabl e in u n i fo rm s el ecti on .

N o t o n ly is t h e yi el d o f l eath er f r o m s u ch hi d e s a n d s k i n s
co m par ative ly lo w an d u n cert a in b u t t h e l e ath e r is ca pab l e ,

o f o nly li m it e d u s e .

T he Unit ed St at e s D e partm ent o f A gri cu lt u re rece ive s

m any pro t e s t s f r om farm er s a n d b u t chers a gai n s t t he wi d e
d i ffer ence tha t e x i s ts b etween t h e p ri ce s p ai d them f o r hi d e s
a n d t h e p ri ce s ch ar ge d th em f o r l e a th e r This con d iti o n i s .

t h e r e s u lt o f m a n y f a ct o r s m o s t o f whi ch a r e n o t p e cu li a r
,

to hi d es an d l eat h er b u t a p p ly e qu a lly t o m an y o the r c o m

,

m o d it ies A ft er t he pro d u cer s ells the m t h e hid es m u s t

.
,

p as s thro u gh n u m ero u s n e ce ss ary pr o ce ss e s o f f u rther m a r

k eting tra ns p o rt ati o n an d m an u f a ct u re b e fo r e b e ing c o n
, ,

v ert ed into l e ather whi ch in t u rn u n d er go e s m any a dd iti onal

,

p r o ce ss es in b eing m ad e i n t o fini she d a rti cl e s a n d in b ei n g

s ol d . It m u s t b e rem em bere d al s o that a l o ss b as ed o n t he ,

1 U S D e a rtm en t o A ri c u lt u r e F rm e r s B ulleti n 1 06 6 C ou n tr y ’ “
.
p .
f g ,
a ,

Hi des and S ki ns , S ki n n i n g, C u ri n g,
”
and M r k e t in g
a , pp . 3- 4 , 9 — 1 1 ,
4 2— 4 3 , 4 6— 5 1 .
1 94 M AR K E T I N G PR O BLE M S
we ight o f t he s alt cu r ed hi d e o f f ro m 1 0 t o 3 0 p er c ent
-
, ,

o ccu r s in t an ni n g T h e wi d e d i ff er e n ce b etwe en t h e p ri ce s
.

o f t h e r aw a n d t h e fi n i sh e d pr o d u ct s a s we ll a s t h e lo w p ri ce s
,

p a i d f o r co u ntry hi d e s a n d s k i n s a s co m p ar e d with t h e pri ce s

p a i d f o r th o s e m a r k e t e d b y t h e p a ck e r s is a l s o d u e p
, art ly
t o s e veral f act or s l e ss d i ffi cu lt t o c ontr ol th a n th o s e j u s t
m e n ti o ned . A m o n g t hem is t h e ge n er al i nf eri ority o f
c o u ntry hi d e s a n d s ki n s d u e t o i n d i ff er ent a n d i m pro per
,

m e t h o d s o f han d li n g a n d t o t h e l a ck o f a well d efi n ed a n d
c l o s ely f o l lo we d s y s t e m o f c l a ss i fyi n g a n d m ark eting th e m .

M u ch i m provem ent i s p ossib l e a l o ng t hes e lines an d thi s ,

re s ts a lm o s t e n tirely with t h e f arm er a n d t h e c o u ntry

b u t ch ers .

There ar e three i m port ant o p erati on s in t h e hand ling o f

hi d es a n d sk ins : Tak e o ff o r ski n n i n g ; s alting an d cu ri n g ;
-

a n d m ar k eti n g .E v ery e ff o rt s ho u l d b e m a d e t o p er f orm

t h e s e O per ati on s pro p erly an d effi ci en tly b earing co ns ta n tly ,

in m i n d th a t t h e hi d e o r s kin a s w e ll a s t h e m ea t i s a n
, ,

a rti c l e O f v a l u e T o t h e sm a ll b u t ch er a n d ev e n t o t h e
.
,

f a r m er with o n ly a n o c ca s i ona l hi d e o r s k in t o m ark et t h e ,

a vo i d a b l e l o ss i s a p p r e ci ab l e a n d co ll e ctiv ely it a m o u nts t o

,

m illi o ns o f d o ll ar s a n n u ally T h e c orr e ct m eth o d s o f s k i n

.

n i n g s a lti n g cu ri n g a n d m a rk eti n g wh en car e f u lly f o ll owe d

, , , , ,

will m or e th an o ff s e t t h e littl e e x t r a ti m e a n d e ff o rt r e qu ir ed ,

by t h e i m pro vem ent in q u a lity a n d t h e b ett er r et u rn s .

3k

T h e gr a d e t er m s em ploye d in m arketing co u ntry hi d es

a n d sk i n s a r e s o m ewh a t i n d efin i t e a n d a r e n o t un i f or ml y
u n d er s t o o d a n d a p p li e d thr o u gh o u t t h e Unit e d St at e s At .

p r e s ent ther e i s n o r e co gn iz e d s t an d ard o f c l a ss ifi cati on

u ni f o r m f o r hi d e s a n d Ski n s o ri gin atin g in a ll s ecti o n s o f t h e

c o u n try . Thi s i s d u e partly t o f or m er h apha z ard m etho d s

o f m arketi n g a n d p a rtly t o t h e a ll e ged d i ff e r e n ce s in t h e

qu a lity a n d cond iti o n o f the s e p rod u ct s in d iff er ent s e cti o n s

o f t h e co u n try . It i s a ss ert ed that t h e con d iti o n s whi ch
p r o d u ce th e s e d i ff e r en ce s o n wh i ch t h e r e s u lting p ri ce
d i ff er en ti al s a r e b as e d a r e n o ti ceab l e e s p eci ally in t h e gr a in ,
t e x t u re , thi ckn e s s , s prea d , a n d q u ality o f t h e leath er , an d
t h a t th ey a r e ca u s e d lar gely b y c lim ati c c o n d iti o ns , m et ho d s
o f h a n d li n g c attl e , ki n d s o f ca ttl e , ki n d s o f f ee d , m eth o d s o f
f e ed i n g , ti ck s , gr u b s , b ran d s , e n vir o n m en t , an d t h e m etho d s
e m p l o ye d in s k i n n i n g, c u ri n g, a n d m ar k eti n g t h e hi d e s .

B e ca u s e o f the s e co n d itio n s t h e hi d e tr a d e h as d ivi d e d t h e

Unit e d St at e s i n t o ni n e s e cti o n s , a n d d i s crim i n at e d a ccord
in gly in t h e p ri ces p ai d f or s i m il ar c l a ss e s a n d wei ght s of
hi d e s a n d skin s o rigin ati n g in t h e v ari o u s s ecti on s .

Whil e i m pro vem ent o f cou ntry hi d e s an d s kins an d

cons eq u ent i n cr ea s e in r et u rns f or th em a r e p o ss i b l e , yet
 MAT E RIAL S AN D E QUIPM E NT 1 95

e ven with hi d e s a n d skin s s im il ar in q u ality t o tho s e p r o

d u ce d by t h e p a ck ers it i s n o t p o ssi b l e f or t h e ind ivi d u al
p r o d u c e r w ,h o m u s t O p e r a t e o n a s m a ll s ca l e a n d m arke t

m o re o r l e s s ind ir e ctly t o r e ce iv e t h e t o pri ce s p ai d t o t he

,

p a c k er s ,w h o g e n e r a lly s e ll d ir e ctly t o t e t ann er s .

T h e t an n ery i s ge n er a lly t h e d e s ti n ati o n o f a ll hi d e s a n d

skin s a n d e ffi ci ent an d e co n om i c m arketi n g will pl a ce the m
,

a t t h e t an n ery d o o r a t t h e e a rli e s t p r a cti cab l e d a t e in t h e

b e st co nd iti o n p o ss i bl e a n d with t h e a id o f o n ly t h e e ss en ti al
m ark e ting age nci e s . E a ch t annery h owev e r as a r u l e
, , ,

s pe ci aliz e s in c e rt ain ki n d s o f l e a th er ,a n d co ns eq u e n tly

m u s t h av e u n i for m ity in it s s u pply o f hi d e s a n d s ki n s Si n ce .

t h e t ann er is n o t in a p o s iti o n t o h an d l e a ll kin d s a n d cl as s e s

o f th e s e m at e ri a l s ,
s om e ce ntral c oll ect ing a n d clas s i fyi n g
agen cy is n e c e ss ary .

It i s h ere that t h e pa cker s ha ve an i n cal cu l abl e m ark eting

ad v an t age o v e r t h e c o u n try hi d e pro d u cer s
-
. T h e p a ck er s
d e al in l arge n u m b er s o f hi d e s a n d s ki n s a n d a s a r e s u lt can
c a n a ss o rt a n d c l a ss i f y th e m in m a rke t a b l e l o t s a n d s e ll
,

th em d ire ctly t o t h e t a n n e r o r with t h e o ccas i o n al int er

v e n t io n o f o n l y o n e a ge n cy ,
n am ely th e hi d e bro k er o r
,

t an n er s b u yer T h e e x tre m ely s ca tt er ed s o u r ces a n d t h e

’
.

co m p ar ativ e ly s m all i n d ivi d u a l pr o d u cti o n o f co u ntry hi d e s

a n d s ki n s m ak e it i m p o ss i b l e f o r t h e co u ntry hi d e p r o d u c er s
-

to o bt a i n this a d va n t a ge The s e wi d ely s catt er e d m at er i als

.

fir s t m u s t b e co ll e ct e d a n d cl a ss ifi e d in l arge l ot s C e n s e .

q u ently b ef or e r ea chi n g t he co ns u m er or t an ner they pas s

, ,

thro ugh m any hand s e a ch o n e o f whi ch e x a ct s its t o ll

,
.

T he O p i n i o ns o f t h e tra d e a r e d ivi d e d o ver t h e pr a cti ca

b ilit y o f d i s pe ns i n g with t h e s ervi ce s o f t h e tra ve li n g hi d e
b u yers o r a gent s o f t h e l ar ge hi d e d e a l er s in cen tr a l m ar k et s .

The ir s al ari es a n d trave ling e x pe n s e s r a n ge f ro m h al f a ce n t

t o 3 c e n ts a p o u n d o f t h e hi d e s they b u y , d e p en d i n g o n t h e
vo l u m e o f b u s i n e ss th ey d o a n d th eir e ffi ci en cy in b uyi n g .

Th o s e o p po s ed t o th e s e a gent s a d vo cat e m a r k eti n g d ire ct

f ro m pro d u ce r t o t h e l a r ge d e a l er s w h o s e ll d ir e c t t o t a n n e r s .

Th ey as s ert th at t he e x p en s e n e ce ss ary t o t h e m ai n t e n a n ce
o f a tr a v e lin g b u yi n g f o r c e sh o u l d b e p a i d t o t h e p r o d u ce r

o r b e u s e d in r e d u ci n g t h e c o s t O f l e a th e r p r o d u c t s Th o s e
.

w h o fa v or t h e r e t e n ti o n o f th e s e a ge n t s s ta t e th at m a n y
hid es wo u l d n ever r e a ch t h e m a r k e t a n d tha t t h ere wo u l d b e
m o re d a m age d o n e s t h a n a t p r e s e n t , wi t h co n s e q u e n t d is
a s tr o u s r e s u lt s t o t h e c o u n try h i d e i n d u s try , b e c a u s e o f t he
-

a b s e n ce o f l o c a l co m p etitiv e b u yi n g . T h e y m a i n t a i n t h at
with o u t t h e trave li n g b u ye r t he p ro d u ce r wo u l d b e a t t he
m e r cy o f t h e u ns cr u pu l o u s a n d u nr e s tr a ine d co n s i gn m ent
hi d e b u yer .
1 96 MARK E TIN G PR OB LE M S
T he l o gi cal a gen cy however with whi ch t h e s m all pr o
, ,

d u oer s ho u l d d e a l wh en s e ek i n g t o m a rk e t hi s hi d es a n d
s k i n s d ire ct i s t h e l ar ge hi d e d eal er w h o a ss em b le s t h e n o n
, ,

d e s cri pt l o t s o f hi d e s f ro m h u n d r e d s o f s m all s l au ght e rer s

a n d d e al e r s a n d p r e p ar e s a n d c la ss ifi e s th e m a cco r d in g t o t h e

d em an d s o f t h e t an n er s t o who m h e O ff ers them in carl o ad

,

l ot s .

An other s e ri o u s f a ct o r in t he co u ntry hi d e sit u ati o n i s -

a n e vil r e p u t a ti o n f r e q u e n tly d e s erve d a t pr e s e nt b u t whi ch

, ,

p er s i s t s e ven in m eri to ri o u s ca s e s M a n y f arm er s r a n ch .

,

m e n a n d s m all b u t ch er s w h o s e e o n ly t h e v a l u e o f t h e m e a t
, ,

o n t h e a n i m a l s whi ch th e y sl a u ght er tre at t h e hi d e s a n d ,

s k i n s ind i ff ere n tly a n d carel es s ly a n d l o ok u p on them a s ,

wa s t e pro d u ct s f or whi ch a n y pri ce i s s o m u ch c lea r ga i n .

The n to o s o m e of t h e tra d er s a n d p ro d u cers o ft e n r es ort

, ,

t o u nn ece ss ary a n d q u es t i o n ab l e u s e s O f s a lt p i c kl e a n d , ,

o th e r c h em i ca l s in o r d e r t o p r e v e nt s hri n k a ge t o a d d f al s e ,

wei ght o r t o r e pl a ce t h e weight l o s t thro u gh nat u ra l shri nk

,

a ge . A pplying wat er t o gree n s alt ed hi d e s j u s t pri or t o th eir -

s a l e f or t h e p u r p o s e o f a d d ing wei ght i s an eq u ally r epr e

h en s ib le pr a cti ce .

The s e q u e sti o nab l e an d d i shones t pr a cti ce s d o n ot

d ece ive e x per i e n ced hi d e b u yer s an d t an n er s w h o d e m an d ,

lib eral r e d u cti on s in t are a n d in pri ces when pu r chas i n g

hi d e s th u s treat e d There d o es re s u lt however a n ati o n al
.
, ,

e co no m i c l o ss si n ce by this ill tr e a t m e nt t h e gr e at est u s e f u l

,

ne s s o f th e s e hi d e s a n d sk ins is d e s troyed Su ch tr eatm ent .

s erve s o n ly t o i n vi t e p enalti e s in t h e f o rm o f low pri ce s ,

n o t o nl y f or th o s e s o l d a t t h e ti m e b u t a l s o f or f u t u r e ,

O ff eri n gs a s d ea l er s br o k er s a n d t a n n ers r em em b eri n g t h e

, , , ,

d ef ectiv e hi d es a n d skins an d a n ti ci p ati n g m o r e m ak e th eir ,

p ri c e a rra n gem e n ts as a m att er o f pr o t e cti on O f t e n the s e .

pri ce s ar e i n eq u it ab l e b eca u s e t h e pena lti e s ge n e ra lly ar e

,

s pr ea d o v er a ll hi d e s o f t h e c o u ntry d e s cri p ti o n .

B e cau s e o f t h e e x i s t en ce v ery gen erally of th e s e i nf eri o r

q u a liti e s o f t h e l a ck o f c ar ef u l s e l e c ti o n a n d c l as s ifi ca ti o n
, ,

a n d o f t h e a pp ar e n t i n cli n ati o n o f m any p er s o ns c on n e ct e d

with t h e tr a d e t o m agn i fy a n d t o cap it ali z e all eged d ef ect s ,

m a n y o f t h e c o u n try h i d e pr o d u cer s f ee l tha t n o a m o u nt o f

-

pr eca u ti o n a n d e ffi ci en cy o n th e ir p art wo u l d b e r ewar d e d

b y b ett er pri ce s Th o u gh s o m e O f them r e aliz e t h at h i d e s
.

hav e v al u e s a n d th at t he s e v al u e s d e p en d l ar ge ly o n car e
f u l n e ss a n d e ffi ci e n cy in ski n n i n g a n d cu ri n g they o f t en , ,

b ecau s e o f t h e e vil r e p u t e o f c o u n try hi d e s a n d sk ins as a

cl a ss f a il t o fi n d a r ea d y m arke t a t r e a s o n ab l e pri ce s e v e n
, ,

tho u gh t h e hi d e s they o ff er hav e b e e n ha n d l e d pro perly .

Wh en a pr o d u cer i s p ai d a s m u ch f o r hi d es a n d skins
whi ch have c u t s s o r e s fles h in gs h orn s d ewclaws t ail b one s
, , , , , ,

s i n ews hair sli p s s al t s t ains p oo r patt er n a n d trim d ragged

, , , ,
 MAT E RIAL S AN D E QUIPM E NT 1 97

spo t s br and s gr u b s a n d o th er im perfecti o ns as fo r th o se

, , ,

whi ch a r e co m pa r ative ly p er f ect h e i s pai d a pr em i u m f or

,

i n effi ci ency a n d ha s n o i n ce n tive t o i m pr o ve h is m etho d s o r

t o strive f o r gr e at e r con s erva ti o n Thi s a ppli es to a l e ss
.

exte n t wh e n hi d es a r e s o l d o n a gr a d e d b as is with o nl y li ght

pena lti e s f or t h e r e s u lt s o f c a re l e ss n e ss .

N O f arm er wo u l d s e ll a f at s t eer f or t h e pri ce o f a n o ld

co w . Th er e i s n o m or e r e a s o n f or s elli n g perf e ct hi d e s a n d
i m p erf ect o n e s at t he sam e pri ce f o r t he c hances a r e t hat
,

t h e p ri ce wi ll b e o n t h e b a s i s o f t h e i n f eri o r o n e s .

T h e hithert o a l m o s t u n iv er s a l p r a cti ce o f s e ll in g co u n try

hi d e s an d s k i n s a t flat pri ces witho u t r egard to s el e cti o ns
a n d gr a d es b a s e d u p o n q u a lity we i gh t a n d c on d iti o n h a s
, ,

co ntri b u t e d in a l ar ge w ay t o t h e pr e s e nt con d iti o n o f

co u n try h i d e s an d ski ns with t he co ns e q u ent t ann er s ’

,

a v er s i o n t o t h e m a n d t h e wi d e m a r gin b e twe en t h e m arke t

pri ces o f s u ch h i d e s an d o f p a ck e r hi d es T he pr a cti ce o f

.

flat s ellin g is n o t s ui t e d t o m o d e r n m e tho d s o f m ark e ti n g

an d h a s b e e n a b an d o n ed b y a ll p r o gr e ss iv e pro d u cers an d
m er chan t s in n e arly e v ery lin e o f m er chan d i s e .

A l on g s tri d e f o rward w as m a d e whe n t he Wa r I n d u s tri e s

B o ard in 1 9 1 8 i ss u e d ord er s r e q u irin g a ll hi d es a n d ski n s t o
b e s o l d by cl a ss e s a n d gr a d e s T h e m a x i m u m r e s u lts o f thi s
.

pro gressive m eas u re h owe ver will b e d ef err ed u n til t h e

, ,

vari o u s m eth o d s o f gra d ing h ave b ee n revi s ed s i m plified , ,

c orr e l at e d a n d f ait hf u lly a p p li e d t o t h e tr a d in g in a ll s ec

,

ti o ns o f t he co u n try Ther e s ho u l d b e well d efin e d cl as s es

.
-

a n d gr a d e s n o t o nl y f o r p a ck e r b u t al s o f o r c o u ntry h i d e s
, ,

a n d s ki n s. I n f a c t a singl e st a n d ar d f or all hi d e s a n d s k i n s
,

b y m e an s o f whi ch th ey can b e gr a d ed a n d s o l d o n m erit ,

regard l ess o f ori gi n is d e s irable a n d d e s erves s eri o u s co n

,

s i d era ti o n A s tand ard iz e d b as i s f or tra d i n g sho u l d m ak e

.

it p o ss ible fo r t h e c o untry pro d u cer s t o re aliz e pri ces m ore

nearly comm en s u r at e wi th t h e q u ality o f their pro d u ct s .

As a r e s u lt carele ss ne ss a n d m u ch i n effi ci ency sho u l d s oo n

,

b e o v er co m e a n d a m arked i m pro v em e nt in t h e m er cha n t s

b ility a n d m ark e t pri ces o f hi d es an d ski n s of t h e co u ntry
cl a ss s h o u l d f o ll ow .

Why is th e re no o rga ni z e d s pecu l ati o n i n hi d es ?

19 8 MARK E TIN G PR O B L E M S
1 23 . L O O SE L E A F A U CTI O N S I N T HE T O B AC C O T R AD E
T he l ar ge st t o b acco gr o wing d istri ct in th e Uni t e d
St a t e s is V ir gini a M a ryla n d N o rth C a r o lin a So u th
, , ,

C a ro lin a K e nt u cky a n d T e nn ess ee with s u bst a nti al

, , ,

q u a ntiti e s a ls o gr o wn in th e a d j o inin g s ecti o ns o f

n ei ghb o rin g s t ates l I n C o nne cti cu t P e nnsylva ni a
.
, ,

Wis co nsin O hi o a n d s ev er a l o th e r n o rth ern st at es

, ,

la r ge q u a ntiti e s o f ci gar l ea f a r e gr own T h e tra d e in .

c i ga r l ea f h o w e v e r is e ntir e ly d istin ct fr o m t h e tr a d e
, ,

i n s o u th ern lea f .

T h e b u lk O f th e t o b acco gr o wn in Vir gini a N o rth ,

C ar o lin a a n d So u th C a ro lin a is kn o wn a s li ght flu e

,

cu r e d l ea f a n d is u s e d l ar ge ly in t h e m a n u fa c t u r e o f

c i ga r e tt e s I n th e w e st e rn p a rt o f K e nt u cky T enne s
.
,

s e e a n d s o m e s e cti o ns in V ir gini a d a rk t o b acco is gr o wn ,

in l ar ge qu a ntiti e s a n d is u s e d f or t h e m a nu f a ct u r e O f
snuf f p lu g twist a n d fin e c u t ch ewin g t o b acco This
, , , .

t o b a cco a lso is s o l d in l a rge q u a ntiti e s fo r e xp o rt .

T h e Bu rl e y t o b acco d istri c t ce nt ers in e ast e rn

K e nt u cky This l e af is u s ed chi e fly f o r th e m a nuf a ctu r e
.

o f s m o kin g t o b a cco .

T h e q u a lity o f t o b a cco d ep e n d s p ri m a rily u p o n

s o il a n d cli m ati c co n d iti o ns Th er e ar e nu m er ou s .

s p eci al ch ar a ct e risti cs o f th e t o b acco gr own in e ach

lo ca lity .

I n east ern V irgini a N o rth C a r o lina a n d Sou th ,

C a r o lin a fo r s o m e ti m e t o b a c co h a s b ee n s o l d a t p u bli c
a u cti o ns by th e s o ca ll e d l o o s e l ea f syst em -
I n th e -
.

B u rl e y d istri c t a n d in th e d a rk t o b acco d istri cts o f

K e nt u cky a n d T e nn e ss ee th e t o b a cco f o rm e rly was
p ack e d in h o gsh ea d s a n d ge n e ra lly shi pp e d t o Lo u isvill e
a n d C in cinn a ti At th es e c iti e s w e r e la r ge w ar eh o u s e s
.
,

in w hi ch th e t o b a cco w as d r yed a n d st or e d a n d s o l d
e ith e r a t a u cti o n o r p riv a t e s a l e a ft e r ins p e cti o n by th e

re pr e s e nt a tiv e o f t h e t o b acco m anu fact u r er T he .

1
R e fer e n ces o n tr a de i n t ob acco z— M Jaco b ste in , The To bacco .

”
I n d us tr y G K H olm e s ,
. .
“
Syst em s o f M a r k et i n g Farm Pr od u cts ,
.

U S D epa rtm en t of A gri cu ltu re, R ep ort N o 9 8

. . U S C o mm iss io n er
. . . .

o f C o r p o r a t i o ns , R eport o n the T o bacco I nd us try G G H u eb ner , . . .

A gri c u lt u r a l C om m er ce A n n e Y ou n gm a n , T ob ac c o P oo ls o f K e n t u ck y
“
.

a n d T e n n ess e e , Jou rnal of P o li tica l E con om y, 1 9 10 To bacco Wor ld

”
. .

T o bac co Leaf .
 MATE RIALS AN D E QUI PM E NT 199

f a rm er fr e qu e ntly h ad r ece ive d fin a n ci a l a ssist a n ce

fr o m th e w a r eh o u s e co m p a ny o n co n d iti o n th a t t h e
t o b a cco sh o u l d b e co nsi gn ed t o t h e w a r eh o u s e co m p a ny
fo r s a l e . Within th e l ast t e n y ears th e shi p m e nt O f
t o b acco in h o gsh e ad s t o L ou isvill e a n d C in cinn ati h a s
r ap i d ly d eclin ed . I n th e B u rl e y d istri ct a n d d ark
to b acco d istri ct a s w e ll a s in V ir gini a th e b u lk o f th e
t o b acco is n o w s o l d by th e l o o s e l e af syst em -
.

A ft e r th e cro p is h arv e st e d it is h u n g o n sti cks a n d

st o r e d in th e t o b a cco b a rn t o cu r e This cu rin g p r o ce ss
.

u s u a lly t a k e s t w o m o n t h s l . As s o o n a s it is s u ffi ci ently
cur e d it is r ea d y t o b e m a rk e t e d
,
T h e f a rm e r in s e l lin g
.

by th e l o o s e l ea f syst em h a u ls a l o a d o f t o b a cco t o th e
—

l o ca l m ark e t t o wn wh er e t h e t o b a c co is p l ace d u p o n
th e fl o o r o f th e a u cti o n r o o m E a ch in d ivi d u a l lo t is
.

th e n s o l d a t au cti o n u s u a lly t o b u y ers O f t h e t o b a cco

,

m a nu f a ct u rin g c o m p a n i e s . As s o o n a s it is s o l d t h e ,

t o b acco is r em o v e d by t h e b u ye r a n d s h i pp e d t o th e
m a n u fa ct ur in g p l a nt wh e r e it is d r y e d st o r e d a n d , ,

p u t thr o u gh th e n ecess a ry p r o ce ss e s t o p r ep a r e it f or
m a n u f a ct u r e . I n s om e citi e s s u ch a s L e xin gt o n K e n
, ,

t u cky whi ch is in th e h eart o f th e B u rl e y dist r i ct th er e

, ,

is m o re th a n o n e l o o s e l ea f au cti o n h ou s e T h e far m e r
-
.

p ays a s m a ll fe e t o th e p r o p ri e t o r o f th e l o o s e l e a f h o u s e
-

f or w e i ghin g a n d s a l e .

Wh y h a v e th e lo o s e lea f au c ti ons su pp lant ed th e

-

m e th o d p r ev i o u sly u s e d for s elli n g t o b a cco in t h e

St a t e o f K e nt u cky ?
Why d o th e t o b a cco m an u f act ur e rs a d o p t a p o li cy
o f b u yin g d ir e ctly fr o m far m e rs a t t h e l oo s e—l ea f
au cti o ns ?

1 K
e n t u ck y Agr ic u lt ur al E xpe r im e t St at io n B u llet
n ,
N o 202
in . .
200 MARK E TIN G PROBL E M S
1 24 . I N TE R N A T I O N A L FU R E X C H A N GE —
A UCT I O N S
I n Febr u ary 1 9 20 th e tw o w eeks au cti o n s a l e s o f
, ,
’

r a w f u rs a t S t L o u is a m o u nt e d t o
. a cco r d

in g to th e n ews p ap e r r e p o rts Fo ll o win g th e St Lo u is . .

s a l e in Febru ary 1 9 20 a lso o ccu rr e d th e N ew Y o rk

, ,

fur au cti o ns a t whi ch p elts v a l u ed a t were

o ff er e d .T h e l a r ge in cr e a s e in th e v o l u m e o f s al e s a t
th es e A m eri ca n fu r au cti o ns is o n e o f th e n o t ew o rthy
e ff ects o f th e w ar .

An im p e t u s t o th e s a le o f f u rs a t p u bli c au cti o n in
th e Unit e d St a t e s w as giv e n by t h e a cti o n o f th e Unit e d
St a t e s go v ern m ent in 1 9 1 3 in s e n d in g its e ntir e cat ch ,

o f Pribil o f I sl a n d s s ea l an d bl u e a n d whit e fo x skins

to St L o u is f o r s a l e a t th e au cti o n in D e cem b e r o f
.

th a t y ea r P r ev iou slv th es e go v ern m e nt fu rs h ad b ee n

.

s e nt t o Lo n d o n to b e au cti o n ed .

Up to th a t ti m e Lo n do n h a d b ee n th e l ea din g m ar
k et in th e w o rl d f o r r aw fur s This is s ai d to h a ve .

b een d u e in p a rt to th e co n d iti o ns o f th e o ri gina l

H u d s o n Ba y C o m p a ny s gra nt whi ch r e qu ir e d th a t ’

a ll t h e p e lts o bt a in e d by this C o m p a ny sh ou l d b e

t k n to Lo n d o n f o s a e
a e r l l O n th e co ntin e nt O f E u r o pe .

th er e w er e a ls o s e v er a l im p o rt a nt fu r m ark ets Ir bit .

,

o n t h e Sib e ri a n fr o nti e r wa s t h e l ead in g m a rk e t f o r ,

Sib e ri a n fu rs T h e c hi e f R u ssi a n fur co m p a ni e s w e r e

.

a ll r ep r e s e nt e d a t th e a nn u a l Irbit f a ir M a ny fu rs .

b ou ght a t I rbit w e re r e s o l d a t th e au cti o ns in Le ip zi g

a n d Lo n d o n Le i p zi g is s a i d t o h a v e b ee n th e m o st
.

im p o rt a nt m ar k e t in th e w o rl d f o r m a nu f act ur e d an d
d y e d f u rs .

7 Wh e n w ar bro k e o u t in E u r o e in 1 9 1 4 th e f ur tra d e
‘

p ,

was imm e d i a t e ly int e rru p t e d L a r ge qu a ntiti e s o f fur s .

th a t p r e vi o u sly h a d b e e n s e nt t o Irbit a n d N ij ni
N o v o gor o d Le i p zi g a n d Lo n d o n w e r e s e nt t o St Lo ui s
, ,
. .

Th e s al e s in St L ou is in Febru a ry 1 920 w er e th e
.
, ,

l a r gest th a t h a d b ee n h e l d u p t o th a t tirn e T h e s a l es .

in M a r ch 1 9 1 6 in St L o u is w er e ab ou t
, ,
. In
Febr u ary 1 9 20 a s st a t ed a b o v e th ey am ou nt ed t o o v er
, , ,

He n ry A Bee rs Jr Ad v e rt is i n g t o K ee p t h e Wo rld s C e n tr al
“ ’
1
.
, .
,

F ur E xch an ge Wit hi n O u r Sh o r es
”
P ri nt er s I n k N ov em ber 2 19 1 6
’
, , , ,
 MATE RIA LS AN D E QUI PM E NT 201

A t this 1 9 20 au cti o n it w as st a t e d th a t
e v e ry kn o wn v ari e ty o f f ur fr o m e v e ry f ur p r o d u cin g -

co u ntry in t h e w o rl d w as r e p r e s e nt e d Am eri ca is s ai d .

t o l ea d t h e w o rl d in t h e p r o d u cti o n o f hi gh gr a d e p e lts ,

b u t l a r ge q u a ntiti es a ls o w e r e s ent fro m f o r ei gn c o un

tri es T h e s a l e s o n Fe br u a ry l 0th f o r e x a m p l e
.
, ,

a m o u ntin g t o in cl u d e d th e f o ll o win g
A u stra li a n o p o ss u m A u str ali a n ri n g ,

t a il o p o ss u m wa ll a by , w om b a ts 6 00 , ,

k a n gar o o s fit ch,
k o linsky , ,

Am e ri ca n e rm in e gra y e rm i n e ,
br o wn ,

e r m in e .

T h e s al e s o n Febru ary 1 l t h a m ou ntin g t o ,

000 in cl u d ed
,
w hi t e h ar es A u str a li a n ,

ra bbits ,N ew Z eal a n d r a bbits D u t ch ,

rabbits Som e o f th es e r a bbit fu rs w er e s o l d t o f u rri ers

.
,

b u t th e b u lk w er e s o l d t o h a tt ers fo r t h e m a n u f a ct u re
o f f e lt h a ts T h e s a l es o n this d a t e a lso in cl u d e d
.

A m e ri ca n o p o ssu m h ou s e ca ts a n d , ,

s m a ll e r l o ts o f h a ir s ea l l e op a r d m ou nt ain li o n o tt er , , , ,

w o lv erin e gr a y fo x Sou th Am e ri can fox r e in d ee r

, , , ,

gu an a co b ear a n d p o l ar b ear
, ,
.

A t th e s a l e s o n o th e r d ays n u m er o u s o th e r v ari e ti e s
o f f u rs w e r e s o l d A lo t o f Unit ed St a t es go v e rn
.

m e nt s ea l skins f or e x am p l e w a s s o l d fo r
, ,

T h e s a l e s a t St L ou is h e l d thr ee t im e s a yea r a r e
.
, ,

a t p u bli c au cti o n o n th e I nt ern a ti o n a l Fu r E x ch a n ge ,

a p riv a t e instit u ti o n 1 T h e ca t a l o gu e s o f th e s a l es a r e
.

p r ep ar e d in a d v a n ce a n d t h e f u rs th em s e lv e s a r e a v a il
,

a bl e f o r ins p ecti o n b e f o r e t h e bi dd in g co mm e n ce s .

Sa le s ar e m a d e a t th es e a u cti o ns in t h e m a in d ir e ctly
t o fu r m a n u f a ct u r e rs a n d o th e rs w h o u s e fu r a s r a w
m a t e ri a l N u m er o u s b u ye rs fr o m f o r e i gn co u ntri e s
.

a tt e n d th es e au c ti o ns .

I n 19 1 7 a
1
s im ilar syst em o f f ur a uct io ns wer e st art ed in N e w
Yo rk Th e fi rst
. a u ct io n w as h e ld i n Ja n u ar y 1 9 1 7 T he s al es a t t his , .

fi rst a u c t io n w e r e a b ou t At t h e s ale t h a t O pe n e d Fe b r u ar y
1 6 19 20 it is r e p o rt e d t h a t
, , pe lts v al u e d a t 000 wer e
o ff er e d T here were ov e r 8 0 v ar i et ies o f fu rs T he N e w o r k a n d
. .

St Lo ui s a u ct io ns ar e c o m pe t it iv e T h e N e w Y o r k a u ct io ns f urt h e r
. .
,

m o re w e r e near ly as lar e as t h e c o n t e m po r a r y a u ct io ns i n Lo n d o n
, ,

a n d t h e s al es a t t he S t ui s a u c t io ns we r e nea r ly t wice as lar ge as

.

t hose i n Lo n d o n i n Febr uar y 1 9 20 , .

202 MARK E TIN G PR OBL E M S
Fu rs a r e hi p p ed o n co nsi gnm e nt by r aw fu r d eal ers
S

to Fu n s te n B r o th e rs C o m p a ny wh o o p e r a t e t h e ,

I nte rna ti o n al Fu r E x ch a n ge Thr o u gh m a rk e t l e tt ers .

,

m a il t e l egr aph a n d cabl e shi pp e rs a r e a d vis e d by this

, , ,

c o m p a ny r e ga r d in g m ark e t co n d iti o n s T h e f u rs u p o n
‘
.
,

r ece i p t a t St L o u is a r e gra de d a n d st o r e d f o r th e
.
,

au cti o n A fe e O f 5% o f th e s e llin g p ri ce is th e co m
.

p e n satio n r ece iv e d by t h e co m p a ny fr o m th e shi pp e r .

O n e p er cent d is co u nt is a ll o w e d t o t h e b u y e r a n d this
is a ls o d ed u ct e d fr o m th e p ri ce r em itt e d to th e shi pp e r .

T h e co m p a ny m ak e s a n a d v a n ce o f m o n e y wh e n ,

d esir ed t o a n y shi p p e r o n f u rs shi p p ed ; t h e in te r est

,

o n th e s e a d v a n ce s is a t t h e r a t e o f 6 % a y ea r T he .

a m o u nt r e a liz e d fr o m t h e s a l e O f e ach lo t o f skins a t

t h e au cti o n is r em itt e d l e ss t h e ch a r ge s imm e d i a t ely

, ,

a ft e r th e s a l e ; th a t is within thr ee t o fo u r w eeks

, ,

th e p e ri o d d ep e n d in g u p o n th e v o l u m e o f b u sin e ss t o
b e h a n d l e d a n d ac co u nt e d f o r .

B u y e rs a tt e n d in g th e au cti o n a r e p rivil eged t o

e x am in e th e f u rs b e f o r e t h e s a l e c o m m e n ce s Pri or .

t o th e au cti o n th e fu rs a r e gr a d e d by e x p e rts an d
a ss o rt e d int o l o ts d e si gn a t e d in th e c a t a l o gu e
,
T he .

p r o sp e ctiv e b u y e r whil e e x a m inin g ea ch lo t m a k e s

, ,

n o t e s in a c op y o f th e ca t a l o gu e f or r e f ere n ce wh e n
bi d d in g I n th e ca s e o f a n a rti cl e lik e A l ask a s eal
.

skins e a ch e ntir e lo t is sh o wn t o th e b u y ers f or ex am

,

in a t io n With a n a rti cl e like R u ssi a n squ ir r el h ow e v er

.
, ,

wh e re a sin gl e lo t m ay n u m b e r skins th e b u yers ,

a r e sh o wn a s am p l e o f a b o u t 50 skins b u t t h e e ntir e ,

lo t m ay b e insp e ct e d if d e sir e d O n e O f th e m o st
,
.

i m p o rt a nt p a rts O f th e b u sin ess o f Fu n s ten B ro s .

C o m p a ny is th e gr a d in g a n d d r a win g o f s am p l e s o f
th e d i ffe r e nt l o ts ; a s a m p l e o f 50 ski ns m u st tr u ly
r ep re s e nt a lo t o f D u rin g th e au cti o n th e
skins ar e s o l d a t th e r at e o f a b o u t 1 00 l o ts a n h ou r .

T h e b u y e r is a ll ow e d f o u r m o nths in whi ch t o p ay
for a n d t ak e d e liv e ry o f f u rs H e m u st p ay 25% o n a .

sti pu l at e d d at e a b o u t o n e m o nth a ft e r th e c l o s e o f
,

th e s a l e kn o wn as Pr o m p t D a y f o r whi ch h e is a ll ow e d
, ,

1 o o
T he f ll win g i n f o r m a t io n w as f ur nis he d b y F u ns t e n Br o t hers
o
a n d C m pa n y .
 MATE RIAL S AN D E QUI PM E NT 203

1% sh d is cou nt T h e b u y e r als o p ays a s m a ll f ee fo r

ca .

ea ch p u r ch a s e a n d br o k er age T h e fee kn ow n
, .
,
“ ”
as lo t m o n ey is 50 c e nts f o r e ach lo t o f s eals an d
,

25 ce nts f o r e a ch lo t o f o th er f u rs .

Wh a t co nsi d e ra ti o ns m i ght in d u ce a s h i pp e r o f hi gh
gr a d e f o x skins in N ewf o u n d l a n d t o s e n d his f u rs t o
St L ou is ?
.

1 25 . C AR R Y I N G ST O C K S IN T HE ST E E L T R AD E
A n e d it o ri a l w as p u blish e d in th e I r on A ge , D e cem
“
b er 3 1 , 1 9 1 4 , o n th e St ea d yin g E ff e cts o f C a rryin g
t
S oc ks 1 T he fo ll owin g st a t em e nt w as m ad e :

It i s a ly a cce pt ed th eory in t h e s t u d y of m arket s

co m m o n
fo r co mm o d iti e s tha t t h e carryi n g o f s t o ck s t en d s t o st ea dy
pri ce s ; th a t co rmn o d it ies th a t ca n b e carri e d in s t o ck a r e
as a r u l e s u b j ect t o l e ss vi o l en t fl u ct u ati o n s t h a n th o s e th a t
m u s t p ass d ire ctly fro m pr o d u cti o n t o cons u m pti o n .

I t is th e n p o int e d o u t th a t th e ex p eri en ce o f th e
st ee l tra d e in d i ca t e s a li m it a ti o n u p o n this th eo ry .

T h e O p ini o n is e x p r ess e d th a t f or this st ea d yin g eff e c t

t o b e r e a liz e d st o cks m u st b e ca rri e d by s e ll ers a n d
n o t by b u y e rs .

T he r yi n g o f s t o ck s o f st eel by j o b b er s an d co n s u m er s
ca r ,

o r r a th e r t h e a b ility t o c a r ry t h e m o r n o t t o c a rr y t h e m i s ,

o n e o f t h e i m p ort an t i n fl u e n ce s t h a t ca u s e t h e wi d e flu ct u a
tio n s t o whi ch st ee l pri ce s a r e no t ori o u sly s u b j e ct .

T h e si gnifi ca n ce o f this st a t em ent is th e n p o int e d

o u t fo r d i ff e r e nt c l a ss e s o f p r o d u c ts I t is st a t e d th a t .

r a ils a r e n o t st o ck e d a n d th a t p l a t e s a n d sh a p e s a r e
st o ck e d t o o nly a s m all p er ce nt age o f th e t o t a l p r o
d u cti o n . B ars , p ip e ,
sh eets ,
wire , h o ops , e tc .
, ar e
1
ron Age De ce m be r 3 1 1 9 14 p 1 4 9 8 O t he r re fe r e nces o n t he
I , , ,
. .

ir o n a n d st ee l i n d u stry : J R S m i t h S to r y of I r o a n d S te el
. . A ,
n . .

Be r l u ri d Uni t e d S t a t es St ee l C o r po r a t i o n C o lu m bi a S tu d ie s Vo l
W
.
, ,

XX I I No 2 1 9 09 U S C o m m i s s io n e r o f C o r po r a t io ns R e po rt o n
,
.
,
. . .
,

the S teel I nd u str y I r o n T r a de R evi ew

. Steel a n d M eta l Di ges t
. . .
204 MARK E TIN G PR OBL E M S
st o ck e d l a rge ly by j o bb e rs r e t a il e rs a n d ma nu fa ct u rin g
, ,

co ns u m e rs This l a st c l ass is n u m er o u s r an gin g fr o m

.
,

th e l a rge m a n u fa ct u r e rs d o wn to th e c ou ntry bl a ck
s m ith Fo r this l a st gr o u p o f p r o d u cts wh e n th e
.
,

m a rk e t is risin g it is st a t e d th a t b u y e rs p u r ch a s e
,

h eavily a n d th a t wh e n th e m a rk e t is fa llin g th ey st ay ou t .

Th u s th ey a lt ern at e ly in cr e a s e a n d d ecr eas e th e ir st o cks

, .

Sh e e ts ar e n o t st o ck e d by p r o d u cers b u t by b u y ers ,

a n d Sh o w wi d e fl u ct u a ti o ns in p ri ce s St ee l p i p e is .

st o ck e d by p r o du cers as w e ll as by b u ye rs an d th e
fl u ct u a ti o ns ar e co m p ara tiv e ly s m a ll Wir e n a ils ar e .

st o ck ed free ly by p r o d u cers .

Why is it th a t th e st e e l m a nu fa ct ur e rs as a ru l e d o
n ot ca rry st o ck s o f a n y Co ns e q u e n ce in t h e ca s e o f r a ils ,

p l a t e s sh,
a p e s a n d sh ee ts ? Ar e th e c o n cl u si o ns s ou n d
th a t ar e st at e d r egar d in g th e r e la ti o n o f st o cks t o p ri ces ?

1 26 . P U R C HA S I N G C O P P E R
A gr ou p o f b u sin e ss m en a r e c o nt em p l a tin g th e
e st a blishm e nt of a m e t a l m a nuf a c t u rin g p l a nt in
C o nn e cti cu t Th e ir o rgani z ati o n a n d th e ir p la n s for
.

fin an cin g th e un d e rt akin g a r e d ep e n d e nt in p art u p o n

c o n d iti o ns a n d m e th o d s o f b u yin g th e ir r aw m a t e ri a ls .

O e of
n th e ir c hi e f r a w m a t e ri a ls will b e c r u d e c o pp e r 1

Fr om wh om can th ey pu r ch as e copp er ?
.
Up o n
wh a t t e rm s ?

1
G e n er al refer e n ces o n c i per : E ngi neeri n g a nd M i n i n g Jo urnal ,
es pe ciall y M a y 1 1 , 1 9 1 2 W . . gf
Wee d , The M i ne s Ha nd book M i ne ral
’
.

I nd us tries S tee l a nd M eta l Digest U S G e o lo gi cal S ur v ey, M i ner al

. . . .

Res ou rce s .
 MATE RIAL S AN D E QUIPM E NT 205

1 27 . LE ATH E R CO M P AN Y —
B R AN C H SA LE S OFFI C E S
gr ou p o f m en are p l annin g t o a cq u ir e co ntr o l o f
A
a n d a m al gam a t e s e v e r a l m e d i u m siz e co m p a ni es e m
-

ga ged in t a nni n g u p p e r lea th er l T h e n ew co m p any

.

wi ll h a v e a cap it a li z a ti o n o f
T h e t a nn eri es th a t a r e t o b e in cl u d e d in this a m a l
gam atio n ar e l o ca t e d in M a ss ach u s etts a n d a t p o ints in
th e M i d d l e W e st H er e t o f o r e s o m e o f th es e t a nn eri es
.

h a v e s o l d d ir e ct t o wh o l e sa l e co ns um ers ; o th ers h a v e
s o l d m ainly t o l ea th e r m er ch ants .

T h e n ew c o m p a ny p l a ns t o e st ablish a s a l e s o ffi ce
in B o st o n Will it b e a d v a nt a geo u s f o r th e co m p any
.

to e st ablish br a n ch s a l e s O ffi ce s ? I f s o wh e r e ? ,

1 28 . U N I T E D SH O E M A C H I N E R Y C O MPAN Y
L E A S E SY ST E M
T he Unit ed Sh o e M achi n ery C om p a ny m an uf a c
t u r e s a l arge p art o f th e m achi n e ry u s e d fo r a tt ach in g
th e s o l es t o th eir u p p e rs a n d f o r th e in ci d e nt a l a n d
finishin g o p era ti o ns co nn ect ed th ere with in t h e m a n u
f act u r e o f sh o e s in th e U ni t e d St a t es a n d in f o r e i gn
co u ntri es I n a dd iti o n t o sh o e m ach in ery thi s co m
.
,

p a ny a ls o s e lls l a r g e q u a ntiti e s o f s u pp li e s f o r u se in
sh o e m anu fa ct u rin g .

T h e Unit e d Sh o e M achin e ry C o m p a ny p r o d u ce s
s e v e r a l typ e s o f e qu i pm e nt fo r sh o e f ac t o ri es 2
Th es e .

in cl u d e m achin e s f o r th e m a n u fact u r e o f sh o es by
th e M cK a y syst em t u rn sh o e s m et a l f ast e n e d sh o es
, , ,

a n d sh o es m a d e by t h e G o o d y e a r W e lt Pr o ces s T he .

G o o d y ea r W e lt sh oe s ar e t h e b e st q u a lity an d t h e
A He a t h C u t b a n k The T an n i g I nd us try
1
.
,
n .

2 Fo r i n fo r m a t io n o n t h e t ech n i u e O f s h oe m a n u fac t ur i n ee
q g , s

F J Alle n T he S h
. .
, I nd u try; a ls o t he S ho
oe s d Leathe r Lexi co
e an n

p u bli s h e d by t h e Boo t a n d Sh oe R e c o r d e r P u b lis h i g C o m pa n yn .

206 MA RK E TIN G PR OB LE M S
Unit ed Sh o e M a chin e ry C o m p any s p eci a li z es p ri m arily
u p o n its G o o d y ea r m achin es T h e Unit ed Sh o e M a . r

c hin e ry C o m p a ny m a n u f act u r e s a b o u t 300 d i ffe r e nt

m achin e s .

T h e e xistin g m a chin e s ar e s u bj e ct t o fr e q u e nt im
r v m e nt a n d n e w m achin e s a r e inv e nt e d T h e c o m
p o e .

pa ny m a int a ins a n e x p e ri m e nt a l d ep a rtm e nt wi th i n

v e nt o rs d rau ghts m e n a n d a n e x p eri m e nt a l m achin e
, ,

sh op Se ve r a l h u n d r ed p eo p l e ar e e m p l o y e d in this
.

e x p e r im e nt a l d ep a rt m e nt s o l e ly f o r t h e i m p r o v em e nt

a n d d e v e l op m e nt o f m a chin es AS a n e x am p l e o f t h e .

a tt e nti o n giv e n t o inv e nti o ns in th e d e ve l opm e nt O f ,

th e p u llin g o v e r m achin e whi ch p u lls t h e u pp e r l ea th e r

-
,

o v e r t h e l a st w as s p e nt in e x p eri m e nt a l
,

w o rk b e fo r e th e m a chin e was comm e r ci ally s u cce ssfu l .

Thi s pu l lin g o v er m achin e h a s -

p a rts in t h e
o p er a tive h e a d ; 8 6 2 o f th es e p a rts m o v e in ea ch o p e r a

ti o n This m a chin e lik e m a ny O f th e o th e rs h a s a v ery

.

d e li ca t e a d j u st m ent T h e G o o d y e a r Stit ch er h a s .

p a rts in th e o p e r a tiv e h ea d 6 1 5 o f whi ch m o v e with ,

e a ch o p e r a ti o n .

Th e r e a r e fr om 100 t o 1 6 0 O p e r ati o ns in m a nu
f a ctu r in g a sh o e Th es e a r e s u cce ssiv e o p e ra ti o ns
. .

T h e f o ll o win g st a t e m e nt by th e Unit ed Sh o e M a chin e ry

C o m p a ny r e ga r d in g th e d e v e l o p m ent O f sh o e m achi n
,

e r y w as q u o t e d by J u d ge P u tn a m in his O p ini o n in
,

t h e U ni t e d Sh o e M a chin e ry C a s e b e fo r e th e D istri ct
C ou r t in Bo st o n M a r c h 1 8 1 9 15 1 , .

Thi s p arti cu lar b u s in e s s o f shoe m a chinery st art ed ab ou t

1 8 60 with t h e M cK ay s ewin g m a ch in e Th er e a r e m en n o w .

a liv e w h o s a w t h e fir s t M cK a y m a chin e i n tr o d u ce d a b o u t ,

1 860 At t h e tim e t h e m ac hin e w as in vent e d b y Lym a n

.

Bl ake ther e w a s n o t in a s h o e f a ct ory a s in gl e m a chin e o u t

s i d e o f t h e s ewi n g m achi n e f o r s tit chi n g t h e u p p ers e x ce pt a
m a chin e f or m aki n g stri p s o f o u t s o l e s an d a kn i fe o rga n iz e d
in to a fr am e whi ch ro u gh ly s h a p ed t he o u t so l e Th ere wer e .

f e w c r u d e p eggin g m achin e s in u s e The re w as n ot an oth er .

m a chin e an d sh o e s we r e m a d e a b so l u t ely b y h an d
, T he .

b us in e ss w as i n s ignifi can t as a who l e e ve n a n d t h e i n d i v i d u al ,

u n its wer e m o s t i n s i gni fica n t M cK ay ha d . when

1
Distr ic t C our t o f t h e Uni te d St at e s D is tr ic t o f M as s a ch us e t ts , ,
N o 30 1 U i t d S ta tes of A me ri ca A ga i ns t U i ted S hoe M achi n e ry
.
,
n e n
C om pa y O p ni o n o f th e C o u rt M ar ch 1 8 1 9 1 5 pp 1 4 — 1 8
n , i
, , , . .
 MATE RIAL S AN D E QUIPM E NT 207

h e b o u ght it . He tho u ght that it w a s a per fe ct m a chi n e ,

b u t hi s w as go n e b e fo r e h e w as a b l e t o s ew a s h oe
on it co mm er ci ally An d th a t i s t h e hi s t o ry o f a ll th e s e
.

m achines They h av e b een m o s t e x p e ns iv e in t h e ir d ev el o p

.

m en t . O n e u n ex p e ct ed f a il u re a ft e r a n o t h er h as b r o k e n
t he h eart s o f t h e inven t ors a n d pr o m o t er s b e fo r e s u cce ss
was a tt a i n ed .

The n c am e t h e C ivil War , a n d t he d em an d fo r s h o e s f o r

t h e s o l d i ers w a s s u ch th a t t h e M c K a y m a ch in e w as a b l e t o
get a st ar t wh i ch o t h erwi s e it m i gh t n o t h av e go tt en .

At t he m o m ent wh en M c K ay st a r t e d t o p u t t hi s m a chi n e
o u t , E li a s M e rwin a n d M cK a y t o ge t h e r inv en t e d f o r t hi s
b u s in e s s t h e r oya lty s ys t em , a n d t h a t s ys t e m h a s p r ev a i le d
t hro u gho u t t he s ho e m a chi n ery b u si n e ss fr o m t he b egi nn i n g .

It w a s a s ys t em o f lea s ing m a chi n e s , a d o pte d in o r d er t hat

t he s h o e m anu fa ct u r er s m i ght b e in d u ce d r ea d ily t o t ak e
t h e m a chine s . B e ca u s e in t h e ca s e o f e a ch n ew m achi n e it
w a s a ll a n e x p eri m e n t , t h e s h o e m an u f a ct u rer s d id n o t d a r e
t o t ak e s u ch m a chi n e s a n d inv e s t th e ir ca p it a l in t h e m .

Th ey d id n o t h av e t h e ca pit al t o i n v e st Thi s p o li cy w a s
.

s ati s fa ct ory t o t h e l a s t d egree , a n d fro m M cK ay s ti m e t o ’

t h e p re s e n t d ay t h e r oy a lty a n d l ea s e s ys t em h a s b e en t h e
p rev ailing an d ch ar a ct e ri s ti c m et h o d o f t he s h o e m a ch i n e r y
b u s i n e s s , s o f ar as t h e gr ea t v a ri ety o f e l ab o r at e a n d r e fin e d
m a chines wh i ch h av e fo ll owe d t h e fir s t M cK ay m a ch i n e
a r e c o n cern ed . O n e t h i n g whi ch t h e G ov e rnm en t a s k s in
t h e ca s e i s th at t h e l e a s ing s y s t e m whi ch h as pr ev ail ed f r o m
t h e s t art in t hi s i n d u s try sh o u l d b e d e s tr oy e d . I f t h e c o u rt
s ho u l d d e cl a r e ill egal , a s t h e Uni t e d St at e s a s k it t o d o , t he
pr ot ectiv e c l au s e s in o u r l ea s e s whi ch we h av e pu t th er e t o
m ak e t h e s ys t em s af e a n d pra cti cab l e , t h e l ea s i n g sy s t em
wo u l d have t o go .

Ther e ar e t wo i m p ort an t a s pe ct s , a t l ea s t , in whi ch t hi s

s ho e m a chi n e ry b u s i n e ss i s u n i q u e . O n e i s t h a t in e ve r y
s ingle s t e p in thi s b u s in e ss u p t o t h e po i n t wh e r e t o d a y
we a r e b u il d i n g 350 m a chi n e s , t h e m a c h in e s h av e b e e n
p at ent e d m a chi n e s , a l way s p a t e n t e d a n d li k e ly t o b e p at ent ed
f or a n i n d efin it e t i m e in t h e f u t u r e , — b e ca u s e t hi s a r t i s n o t
yet e x ha u s t ed T h ir t y fiv e m il li o n s o f d o lla r s o f t h e pr o perty
-
.

o f t h e S h o e M a chin ery C o m p a n y i s in t h e h a nd s o f t h e s e
s ho e m an u fact u r er s It fi n an ce s t h e m t o t ha t e xt en t It
. .

kee p s t h o s e m a chi n e s in r e pair , s o t ha t t h e sho e m a n u fa c

t u r er s h ave n o q u e s ti o n o f m ai n t en a n ce ; n o c o s t o f m a i n t e
n an ce t o d eal with I t s e e s t ha t i n fo r m ati o n cal c u l at e d t o
.

m ak e t h e o p er ati o n o f t h e m a chi n er y m o r e e ffe ctiv e i s

co ll e ct e d a n d d i ss e m i n a t e d t h r o u g h o u t t h e f a ct o r i e s. T he
s ho e m anu fa ct u r er s w h o d eal wit h o u r co m pa n y d o n o t h av e
t o b e o n t h e wat ch t o ge t t he b e s t p o ss i b l e m a ch in e s . Th ey
k n ow t h a t t he d e fe n d a n t wi ll s u pply t he m wit h t h e b e s t .
208 MARK E TIN G PR OBL E M S
They know that their m achinery is th e b e s t in the wo rld ,

a n d th at if b ett er is d evi s ed they will s u r e ly ha ve it

, , There .

is nothing fo r them t o lo ok a ft er e x ce pt t he q u e stio n o f

lab or t he pu r cha s e o f m ateri al t h e d e s i gn o f their go od s
, ,

a n d s e llin g th em It i s with thi s b u s in ess n ot with a n y

.
,

o th er th a t t h e co u rt h a s t o d et er m i n e wh e th e r wh a t th e s e
,

re s pond en t s h ave d o n e wh at co n tr a ct s they h ave m ad e

, ,

have b een in th e norm al o rd erly nat u ra l line o f d evel o pm e n t

, , .

M cK ay h ad hi s l a sti n g m a chine ; Th om p s o n h ad hi s
l a sti n g m achi n e ; s oo n C o pe l an d cam e a l o n g with hi s la s ti n g
m a chine ; all p at en t ed ; an d t he i m pre ss i on ri ght s tra i ght
thro u gh of tho s e work ing in thi s ar t who wer e m o s t in t el
li gi b l e w a s thi s that you m i ght d o m an y thi n gs with m a
,

chin ery in sh o e m a nu f a ct u ri n g b u t y o u n e ve r c o u l d l a st ,

b y m achi n ery b e cau s e yo u a r e d ealing with l e ather whi ch

, ,

i s a m o s t d iffi cu lt thing t o d eal wit h It i s s o e x p ens ive .

t h at every s crap shou ld b e s ave d a n d non e inj u red N o .

t wo a d j a ce nt centi m et er s o f l e ather a r e t h e s am e in c har

a ct er a n d con diti o n I n fl exi b ility a n d ca p a city f or str e t ch
.

in g n o t wo s p o t s a r e a lik e ; t h e s u r fa ce char a ct er co ns t antly

v ar ie s ; a n d yet yo u m u s t m ake a fi n i s h ed s hoe with o u t was te

o r l o ss a n d a s p er fe ct as p o ss i b l e a n d t h e t w o s ho e s o f ev ery ,

p air m u s t b e p erf e ctly m at ch ed It was t h e gener al b eli ef .

that t h e la s ti n g m a chin e was an i d l e dr eam .

Bu t t h e l a s ti n g m a chine h as c om e ; a n d s o h as ev ery
o ther m a chin e th at was r eq u ir ed in thi s ind u s try T he .

1 50 p ro ce ss e s that a re em plo yed in m aking sh oes ar e all

d on e t o d ay b y m a chi n ery It i s o nl y a Sho rt ti m e a go that
.

t h ere w as s o m e t alk a b o u t cu ttin g o u t t he u ppers ; m en sai d

that yo u never co u ld d o that H u m an int elligen ce se em e d .

a b s o l u t e ly e ss e n ti a l f o r t h e wo rk N o w w e have a m a chine .

that d o u bles t h e effi ci en cy o f t h e h u m an o p erat o r in cu tti n g

o r d yi n g o u t t h e u p p er s a n d d o e s it m u ch b ett e r
,
This is .

t h e cli cki n g m a chi n e .

M oreover t h e N o 5 l ast er o f t o day i s o f s u ch a char a ct er

,
.

tha t t h e I d e al a n d t h e C ha se o f 1 899 a r e pra cti cally o b so l et e

m achines T h e we lt e r a n d s tit ch er o f t o d ay a r e e no r m o u s ly
.

m or e u s ef u l effi ci e nt an d e co nom i cal t h an tho s e o f 189 9

, , ,

a s t h e r e co r d s h ows T h e r o u gh r o u n d er h as b ee n p er f e ct e d ;
.

a n d s o it go e s ri ght s tr a i ght thr o u gh wi th e v ery m a ch i n e i n

u se in 1 8 9 9 a s t o a ll o f whi ch th er e h av e b een a l o ng li n e
,

o f p at en t e d i m pr o v em e nt s o n e s u ccee d ing a n o th er a t f r e
,

qu en t int erva l s e very o n e o f whi ch d oe s s om ethi n g that

,

p r e vi o u s ly was d o ne b y h and o r w as n o t d o n e a t a ll ,
SO .

that t o d ay yo u have a com pl et ely d evelo ped o rganiz ati o n

o f m a chin ery a d a pt ed t o t h e m an u f a ct u r e u n d er t h e m o s t ,

f av or ab l e co nd iti o ns o f th e sho es tha t t h e p u b li c r eq u ir e

,
.

I f t he r equ irem e n t s ch an ge t h e m a ch i n ery i s a t o nce changed

,

to m ee t tho s e n ew r e q u ire m en t s a n d th ere h as b e en a co n ,

t in u ou s an d l ar ge gain in econ om y an d effi cien cy .

 MATE RIAL S AN D E QUIPM E NT 209

We t alk chi efly ab o u t t h e we lt sho e be ca u s e th at i s t h e ,

m o s t im p ort an t s h o e o f all a n d t h e o n e t o whi ch o u r b u s i n e ss

m o s t l argely r e l at e s T h er e w ere o n ly
. o f th em
m ad e in 1 8 9 8 o r l e s s t ha n 1 0% o f all s ho e s m a d e
, I n 1 9 10 .

there wer e o ver pa ir s a n d t h e pro p o rti o n o f

,

we lt sh o es t o a ll sh o es m a d e h as b ee n st ead ily incr eas ing .

An d why thi s i n cr e a s e ? B e ca u s e w e h ave giv en t o t h e s h o e

m a n u f a ct u r ers b etwe e n 1 8 9 9 a n d t h e pre s e nt ti m e b ett er ,

m achi n e s a n d r a d i cally n e w m a chi n es whi ch e n ab l e d t h em ,

t o m ak e t h o s e s h o e s s u c cess f u lly a n d a t a lo w co s t We a re .

s ol ely re s pons ib l e f o r this entire d evel o pm ent T h e wh o l e .

cr ed it o f it b e l o n gs t o u s .

N o w it is n o t u n r ea s onab l e t o l o ok at this com pl e x a n d

com pl et e sh o e m a ch i n ery sy s t em in t hi s way Tak e a s cr ew .

m a ch ine . Th ere i s a n o rgan iz ati o n on o n e f r am e w hi c h

f e e d s t h e b a r c u t s O ff t h e ri gh t l e n gt h p u t s in t h e s cr ew
, ,

t hre ad m ake s t h e po i n t m ak es t h e h e ad a n d cu t s t he s l o t
, , ,

in t h e h e ad t h u s m ak i n g a co m pl et e s crew
,
T h e m an u .

f a ct u r e o f a s h o e in a m od ern f a ct ory i s pr a cti cally a u n it ary

o p er ati o n li k e t h e m akin g o f a s cr ew ; ev ery o n e o f t h e m a n y
,

s t e p s b ei n g co or d inat e d t o the o ther s a s if all were t ak en in ,

a s ingl e m a chin e E v erythi n g i s a i m e d at o n e p ro d u ct an d

.
,

e v ery si n gl e m a chine is d efi ni t ely r el a t ed t o t h e m a chi n e s

t h a t fo llow it a n d t o t h e m achine s t hat a r e b a ck o f it
,
.
.

T h es e m a chi n es tha t w e have t alk ed a b o u t a s b ei n g cl as s ified

“ ”
i n to d e part m en t s cov er s o m eti m e s m a chines o f o n e d e
,
“ ”
p ar tm e n t ti ed t o tho s e o f an o th er ; y et th er e is n o c on
s e cu t iv e r e l ati o n o f o n e d e p art m ent t o a n o th er in t h e o r d er

O f u s e o f t h e m a c h in e s in m a k i n g a s h o e b u t yo u s t a rt in ,
“ ”
with o n e m a chine f rom d epart m ent A a n d t ak e t he ne x t ,
“ ”
fr om d e part m ent D a n d th e n o n e f r o m
, C a n d t he n ,
“ ”
o n e from E t h e r e s u lt b ein g th at wh en yo u get t hr o u gh
, , ,

th ey hav e all b e e n i n t erwove n a n d t h e s eq u e n ce work ed ,

o ut ,
n ot d e part m e n t b y d e p art m ent b u t o n e m a chi n e ,

a ft er a n o th er in a n y o r d e r a s f a r as t h e d e part m en t s a r e
,

co n cern ed Th at i s t h e wh ol e i s a co nti n u o u s pro ce ss

.
, ,

ai m e d a t o n e u n it ary r e s u lt ; a n d e a ch o f t h e m a chi n e s ,

what ever t he d i s trib u ti o n am o ng t he d i ff erent d e pa rt m en t s ,

is organiz ed t o s u cce e d t h e p ri or m a ch i n e e fli cie n tly a n d ,

t o pre pare t he s h oe f o r t h e n ex t m a chine An y o n e of t he .

m achi n e s m ay s p o il a s h o e ; a n d t he r e s u lt i s th at o n e O f t h e
g r e a t p r o b l em s O f thi s a r t h a s b e e n t o o r g an iz e e a ch m a chi n e ,

s o th a t n o t o n ly wil l it d o it s wo r k wi t h o u t i n j u r y t o t h e
sho e b u t tha t t here will b e n o d i ffi cu lty when y o u co m e t o
,

t he s u b s eq u en t m a chi n e s T h e wo rk o f e a ch m a chi n e m u s t
.

b e d o n e s o tha t t he n e x t m a chi n e will w ork with t he r eq u ir ed

a ccu r a cy .

O f th e 300 m a chin es m a n u fact u r e d by th e Unit e d

Sh oe M a chin ery C o m p a ny a b o u t 200 a r e s o l d o u tri ght , ,
2 10 MARK E TIN G PR O BLE M S
o r o cca si o n ally l eas ed a t th e o p ti o n Of th e u s er Th es e
.

m a chin e s th a t a r e s o l d o u tri ght d o n o t r e q u ir e e x p e rt

a tt e nti o n in u p k e e p .

Ab ou t 1 00 m achin es a r e n o t s o l d Se v e n o f th e s e
.

m a chin e s th a t a r e n o t s o l d a r e l ea s e d t o sh o e m a n u
f actur er s o n c o n d iti o n th a t th e y p ay a r o y a lty r a ngin g
fr o m l ess th a n o n e c e nt a p air t o six ce nts a p a ir T h e .

hi gh est r o ya lty p ai d o n a p a ir o f sh o e s in th e m a nu
f act u r e o f whi ch Unit ed Sh o e M achin ery C o m p any
m achin e s a r e u s e d is a b ou t six ce nts .T h e tw o l a r gest
r o ya lty p ayin g m a chin e s ar e th e G o o d y ea r W elt er
a n d Stit ch e r whi ch a r e n e ce ss ary f o r th e m an u f a c

t u r e o f G o o d y e ar W e lt sh o es . Th e s e m achin e s ar e
l ea s ed t o geth er T h e com p any d o e s n o t l eas e th em
.

s ep ar a t ely.

T h e s u p p l em e nt a ry m achi n es su ch a s th e ch a nn e l
,

in g m achin e a n d n u m er o u s o th e rs a r e f u rnish e d with

,

o u t ch ar ge t o sh o e m a n u f a c t u r e rs w h o u s e t h e r o y a lty

p a yin g m a chin e s Th es e m a chin e s th a t ar e fur ni sh ed

.

with ou t cha rge a r e kn o wn as au xili a ry m a chin e s Th e y .

ca nn o t b e o bt a in e d u nl e ss th e G o o d y ea r W e lt e r a n d

Stit ch e r a r e u s ed Th e s e au xili ary m a chin es e n abl e

.

f ast e r a n d b ett e r p r o d u cti o n as w e ll as a s a vin g in co st

t o th e sh o e m a nu f act u r er .

T h e l ea s es o f t h e Unit ed Sh o e M a chin e ry C o m p any

o r d in a rily ar e f o r s e v e nt e e n y ea rs . Th ey r e qu ir e th a t
th e s h o e m a nu f a ct u r e r u s e th e m a ch in es as n e arly t o
cap a city as p o ssibl e T h e l e a s e s a ls o p r o vi d e th a t t h e
.

Unit ed Sh o e M a chin ery C o m p a ny h as th e ri ght t o

insp ect th e m a chin e s a t a n y tim e a n d r ep l ace a n y
’
m a chin e a t th e Unit e d Sh oe M a chin ery C o m p a ny s
o p ti o n with o u t e x p e ns e t o th e sh o e m a n u f a c t u r e r .

Th ey r e qu ir e fu rth e r th a t r ep a ir p arts sh a ll b e p u r
ch a s e d o nly fr o m t h e Unit e d Sh o e M a chi n e ry C o m

p a ny. T h e c o m p a ny m a int a ins a s e rvi c e d e p a rt m e nt

in ea ch O f th e sh o e m a nu f a ct u rin g d istri cts in th e
Unit ed St a t e s s o th at a n y a d j u st m e nt o f th e m achi n e s
,

o r r ep a ir w o rk ca n b e t a k e n ca r e O f im m e di a t e ly T he
.

Unit ed Sh o e M achin ery C o m p any o ft e ntim es shifts

m achin e s fr o m o n e f act o ry wh e r e th e y a r e n o t r e qu ir ed
to an o th e r f a ct o ry whi ch n e ed s add iti o n al e qu i p m e nt .
 M ATE RIA L S AN D E QUIPM E NT 21 1

M a chin e s whi ch ar e u s ed fo r m e t a l f a st e nin gs ,

h ee l ers a n d e y e l e t m a chin e s ar e f u r n ish e d t o sh o e

,

m a n u f a ct u r ers o n c o n d iti o n th a t t h e s u pp li e s fo r th e s e
m achin e s b e p u r ch a s e d o nly fr o m t h e Unit e d Sh o e
M a chin ery C o m p any T h e p ri ce o f t h e s u p p li e s in
.

e l u d e s th e r o y a lty . T h e m e t a l f ast e nin gs in cl u d e

s cr ews wir e a n d s o o n
, ,
T h e m a chin e s th a t ins e rt
.

th e s e m e t a l f ast e nin gs a r e c o m p li ca t e d a n d i t is ,

n ecess a ry th a t th e s cr e w wir e fo r e x am p l e b e o f
, ,

e x a ctly t h e ri ght si z e thr e a d a n d o f th e ri ght m a ll e

, ,

a bility in o r d e r t h a t th e m a chin e m a y o p e r a t e p r o p erly .

Sim il a rly with t h e e y el e t m a chin e T h e e y el e ts a r e

.

f e d thr o u gh a r a ce w a y a n d t h e d e li ca t e a d j u st m e nt
,

O f th e m a chin e r e q u ir e s a c cu r a c y in t h e m a t e ri a ls .

T h e am o u nt o f m a t e ri a ls u s e d by th es e m e t a l f as t e n
in g m a chin e s h e e l e rs a n d e ye l e t m a chin e s m e asu r e s
, ,

th e a m o u nt o f w o rk d o n e T h e n u m b e r o f sl u gs p u t
.

in th e h ee l o f a sh o e f o r e x am p l e v a ri e s a cco r d in g t o
, ,

th e kin d o f sh o e a n d th e styl e a d o p t e d by th e m a n u
fa ctur e r Th er e is n o ch a r ge f o r this gr ou p o f m achin es
.

e x cep t f o r w ha t is in cl u d e d in th e p ri ce o f t h e m a t e ri a ls .

A ll o th e r m a t eri a ls s o l d by th e Unit ed Sh o e M a chin e ry

C om p a ny a r e s o l d o n th e o r d in ary c o mm er ci a l b asis in
co m p e titi o n with o th e r s u pp ly m a n u f a c t u r e rs .

Fr o m th e st a n dp o int o f t h e Uni t e d Sh o e M a chi n e ry

C o m p a ny wh a t a r e th e m e rits o f this syst em o f m ar
,

k e tin g? Wh a t a r e th e m erits o f th e syst em fr om th e

st a n d p o int o f a sh o e m an u fa ct u r e r ?

1 29 . M A N C H E S T E R T E X T I LE M A C H I N E R Y C O M P A N Y
A C C E P T I N G P A Y M E N T I N ST O C K
Pri o r t o th e w ar t h e M a n ch e st e r T e xtil e M a chin e ry
C om p a ny whi ch m a n u fact u r e s s p innin g a n d w e a vin g
,

m achin e ry o n a l ar ge s cal e for co tt o n m ills h ad a ccep t ed ,

21 2 MARK E TIN G PR OB L E M S
c ap it a l st o ck in n ewly o r ga niz e d m ill com p a ni e s in th e
So u th ern st a t e s in p a rt p a y m e nt f o r m a chin e ry .T he
m achin e ry w as s o l d o u tri ght n o t l e a s e d Du rin g 19 1 9
, .
,

th e co m p a ny r e ce iv e d o r d e rs f o r m achin ery t o b e p a i d
,

f o r in ca sh u p o n d e liv e ry whi ch d is p o s ed O f its e ntir e

,

o u t p u t f o r m o r e th a n t w o y ea rs in a d v an ce . Wh e n
d em a n d a gain sl a ck e ns th e co m p a ny p r o b ably will h av e
,

o c c a si o n t o c o nsi d e r wh e th e r o r n o t it will r e s u m e its

p r e vi ou s p o li c y o f a cce p tin g c a p it a l st o ck in n e w m ills

in p art p a ym e nt fo r its s a l e s .

Wh a t f a ct o rs sh o u l d b e t a k e n int o a cco u nt in
d e ci d in g this q u esti o n o f p o li cy ?

1 30
. E AG LE M O T OR C OMPA N Y
—
TR U C K SA LE S
T h e E agl e M o t o r C o m p a ny , a w e ll - est ablish e d
au t o m o bil e co m p a ny , w hi ch h as b ee n e n ga ge d in t h e

m a n u fa ct u r e o f m e d i u m p ri ce p l e a su r e cars , h as d e ci d ed
-

to a d d s m a ll a n d m e d i u m siz e tru cks t o its o u t p u t

-
.

T h e p l ea su r e ca rs h a v e b ee n s o l d t o d e a l e rs thr ou gh
e x cl u siv e d istrib u t o rs l o ca t e d in t h e l ar ge r c iti e s .

Ho w will th e s a l e s p r o bl em s o f th e tru ck b u sin e ss

d iff e r fr o m th o s e o f th e p l eas ur e car trad e ?
 P AR T VI

S A LE S M A N A G E M E N T 1

HE p r o bl em s in this s ecti o n illu str at e th e r e la

ti o ns o f th e s a l es d ep art m e nt t o o th e r d ep a rt
m ents in a b u sin ess r el a ti o ns t o cu st om e rs , ,

m ark e t a n a lysis th e d e t e rm i n a ti o n O f th e s e llin g p o ints

,

o f t h e p r o d u ct s a l e s o r ga niz a ti o n s e l e cti o n a n d tr a in
, ,

in g o f s a l es m e n m a n a gem e nt o f s a le s f o r ce a n d p o li ci es
, ,

in r egar d to gu ara nt ee ca n cell ati o ns a n d r e t u rn goods

, , .

131 . WH I T E ST A R FAR M M A C H I N E R Y C O M P A N Y
P R O D U C T I O N SC H E D U L E
The Whi t e St a r Fa rm M achi n e ry C o m p a ny m a nu
f ac t u r es far m i m p l em ents o n a l arge s ca l e T h e c o m .

p any h as fo u n d it n e ce ss a ry t o p l a n its s ch e d u l e o f
m a n u f act u r e tw elv e to fift e e n m o nths in a d v a n ce o f
s al e T h e m a nu fa ct u rin g p eri o d is l o n g T h e s ellin g
. .

s ea s o n ea ch y e ar is sh o rt T h e co m p a ny s ells its .

p r o du cts u n d e r its ow n br a n d s a n d d istrib u t e s di r e ctly

to r e t a il ers thr ou gh its o w n wh o l es a l e br a n ch es .

Ho w is this co m pa ny t o d e t e rm in e th e q u a ntity o f
im p l em ents to b e m anu fa ctu r ed each y ea r ?

1
G e ne r al r e fer en ces on Sales M a n age m e n t z— A . W . Sh a w , A n
A ppr oac h to B us i ne s s P ro ble m s Me lvi n T C o pe la n d ,
. . B us i nes s S ta
tietzes P T C h e ri n gt o n , A d vertis i ng as a B us i n es s For ce A W
. . .
. . .

Sh a w C o m pa n y , T he K na c k of S elli n g; Or ga n i zi n g f or I nc r eas ed S ales ;

Ha n dli ng S a lesm en at Low er C os t; Gr a phi ca l a n d S tati s ti ca l S ale s Helpe ;
Li br a ry of B usi ne s s P r a cti ce B u t le r , De Bo w e r a n d Jo nes , M a rketi n g
.

M ethods A W Do u las , T ra veli ng S a le s ma n s hi p E C Si m m o n s

S
. . . .
. .

”
T he Big T hi n gs i n e lli ng, S ys te m , Fe b r uar y , 1 9 20 , p p 257 260
“ ‘ ’
.
-
.
2 14 MARK E TIN G PR OBL E M S
132 . OR I O LE C O M P AN Y —
SP E C I A L O R DE R D E P A R T M E N T
T h e O ri o l e C o m p a ny o f C hi cago m a n u fa ct u r e s
c l o thin g s o l d u n d e r its o w n n a ti ona lly a d v e rtis e d br a n d .

All its p r o d u c t is m a n u fa ctu r e d in its o wn fa ct o ry .

T h e O ri o l e C o m p a ny s e lls t o r e t a il e rs wh o h a v e e x cl u
siv e a ge n ci es I t h as cu st om e rs in a ll p a rts O f th e
.

Unit ed St a t es .

T h e O ri o l e C o m p a ny co m es int o c om p e titi o n with

t ailo rs to - th e— tra d e , th e so - call ed wh o l es al e t a il o rs w h o
-

m a k e cl o thin g to m ea s u r e in th e ir p l a nts in N ew Y o rk
a n d C hi cago o n o r d e rs a n d sp ec ifi ca ti o ns s ent t o th em

by th e ir agents Th ese wh o l esa le t a il ors fu rnish th e ir

.

a ge nts e a ch s ea s o n with w e ll p r ep a r e d styl e b oo ks a n d

-

with s am p l es o f th e fabri cs th a t ar e c arr i ed in st ock .

T h e O ri o l e C om p a ny is co nsi d erin g th e e st ab lish

“ ”
m e nt o f a sp e ci a l o r d er d ep a rtm e nt in whi ch o r d ers
“ ”
for in d ivi d u a l su its a n d o v e r co a ts t o m eas u r e m ay
b e fill e d I f th e d ep art m e nt is e st abli sh ed th e o r d e rs
.
,

will b e r e ceiv e d fr o m th e r e t a il ers wh o n o w ca rry th e

r ea d y to w ea r p ro du c t o f th e co m p a ny I t is n o t
- -
.

p l a nn e d t o est ablish an y age n ci e s e x cep t in th e st o r es

th a t ca rr y th e r ea d y to w ea r p r odu ct O f th e O ri o l e
- -

C om p a ny .

Wh a t wo u l d b e th e a d va nt age s an d d isad va nt age s

“
to th e O ri o l e C om p a ny o f e st a blishi n g this s p eci a l
”
o r d er d ep ar tm e n t l
? I f it w e r e t o b e e st ablish e d ,

sh ou l d it b e fea tu r e d p r om in e ntly in th e a d v e rtisin g

o f th e O ri o l e C o m p a ny a n d O f its r e ta il a ge nts ?

D . Jo Tr ai ni n g M e n t o Han dle a Di v e rsit y o f P rod u cts ,

ce ,
“

P ri n ters
’
n k , Feb r u ar y 1 2, 1 9 20, p p 3 12 . W D Sco tt , T est i n g
. .
“
.

Pr os pe ct iv e Sal es m e n , P ri n ters I n k , Feb r uar y 1 7 1 9 1 6 , pp 6 1

” ’
.

T h e Sales m a n Pr ob le m , ho les a le Gr o cer s

“ ”
R E Hills ,
’
. . N ati ona l
B u lleti n , A p ril Leo n Alle n , Fac ts Y o u M ust H av e Wh en
“

R ou t i n g Sales m e n .

1 O n t he i n te rr e l t io n o f de art m e n ts see A W Shaw An A

p p pr oach
a
.
, .
,

to Bu si ness P ro b
 SAL E S MANA G E M E NT 2 15

1 33 . DORW AY M A N U FA C T U R I N G C O M P AN Y —
SP E C I A L
OR DE R S
T h e D e rw a y M a n u f a ct u rin g C o m p a ny p r o d u ce s
’
b u il d ers h a r d w a r e O f m ed i u m a n d hi gh gra d e I ts .

p r o d u c t is s o l d t o wh o l e s a l e rs a n d a ls o dir e c t t o l a r ge

r e t a ile rs wh o t ak e co ntr a cts f or th e b u il d e rs h ar d war e

’

r e q u ir e d f o r b ig c o nstr u cti o n j o bs T h e D o rw a y .

C o m p a ny ca rri e s s e v e r a l th ou s a n d it em s in st o ck .

Fr e qu e ntly th e r e is a d em an d f o r s p eci a l styl e s a n d

siz e s o f h a r d w ar e f or in d ivi d u a l j obs whi ch ca nn o t b e
fill e d fr o m t h e st o ck p a tt erns .

Wh a t m u st th e D o r wa y C o m p a ny co ns i d e r i n
d e ci d in g wh e th e r o r n o t t o ca t er t o this s p e ci a l o r d e r
tra de ?

1 34 . ST A R P APE R C O MP AN Y —
ST O C K To BE C AR R I E D
T h e St a r P a p e r C o m p a ny , l o ca t e d i n K a l a m a z o o ,
M i chi ga n , h a s a p ap e r m ill with six m a chin e s T h e .

co m p a ny m a n u fa c t u r e s a b ou t o n e th ou sa n d gr a d e s ,

w e i ghts , a n d siz es o f p ap e r T h e a v e ra ge siz e o r d er

.

is te n t o tw e nty t o ns On s p eci a l o r d ers th e mi ni m u m

.

o r d e r is thr ee t o ns Ab o u t 50% o f th e o r d ers ar e st o ck

.

o r d e rs a n d a b o u t 50% s p eci a l o r d e rs
, T h e co m p a ny .

n o rm a lly ca rri e s ab o u t t o ns in st o ck T h e ou t .

p u t O f th e mi ll is s o l d t o j o bb e rs .

T h e St a r P a p e r C om p a ny h as a c q u ir e d th e o wn e r
shi p o f a s eco n d m ill with fiv e p ap e r m a chine s Wh e n .

th e s e co n d m ill wa s a cq u ir e d t h e sa l e s m a n age r o f th e
,

St a r P a p e r C o m pa ny a d vo cat e d a p o li cy o f c a rryin g
P ri n ter s I n k N o v e m b e r 27 1 9 1 9 p p 1 6 2 1 70
’
, , , Willi am O N e il
.
—
.
’
,

Str ai gh t S ala r y fo r Sa les m e n , P ri n ter s I n k , Ap r il 8 , 1 9 20, pp

“ ’
.

S ystem P ri n te rs I n k A d vertis i n g a nd S elli n g S ales

’
1 1 9 1 28
—
. . . .

M anageme n t . M a r keti n g The S ales M an a ger

. .
216 MARK E TIN G PR OBL E M S
t o ns in st o ck fo r th e tw o m ills I f this w er e t o .

b e d o n e th e a d va nt a ge s o f th e c o m bin a ti o n o f th e two
,

m ills w o u l d b e l ar ge ly e li m in a t ed .

Wh a t p l a n sh o u l d b e a d o p t e d t o d et erm in e th e
a m o u n t o f sto ck t o b e ca rri e d ?

1 35 . E XE T E R WA G O N C O M P AN Y —
ST A N DA R D I Z A T I O N
f o llo win g s ch e du l e fo r m a nu fa ct u r e rs o f fa rm
T he
w ago ns w as issu ed by th e C o ns erva ti o n D ivisi o n o f th e
War I n d u stri e s Bo a r d J u ly 18 1 9 1 8 :
[

“ ”
L
C ASS A FA R M WA G ON S AN D G E AR S

C a pa ci ty: T h e m an u fa ct u r e of f ar m wagon s t o b e
r e stri ct ed t o f ou r capaciti es , u s in g ca st sk e i n s as
f o llows :
”
Light 1 500 lbs capa city, sk ein siz e 2 2
.
1

M ed i um 3 000 lb s c apa city, s k ein s iz e

.

Sta n dard 4 500 lb s ca pa city , ske in s iz e

.

”
H eavy 6 000 lb s cap acity, s k ein s iz e 3 4 3
.
1

S ten ci li n g: All ge ar s t o b e s t en cil ed a s f o ll ows , sk e in

iz e s n ot t o a p p ear
s .

Light 1 500 lb s cap a city .

M e d i um 3 000 lb s ca pa city .

Stan d ard 4 500 lb s ca pa city .

H eavy 6 000 lb s capa city .

T ra ck : T h e m an u f a ct u r e o f wago ns t o b e r e stri ct ed t o
o n e s t a n d a rd tr a ck o f 56 m ea s u r e d f r o m cen t er t o
"

ce n t e r o f tir e o n gr o un d .

Width between S ta kes : Wagons t o b e m ad e of on e wi dth ,

”
viz 38 b etwe en s t ak es
.
, .

S ta k es : Wh er e s t ati o n ary st ak es ar e u s ed th ey a r e t o ,
” ”
b e f u rn i sh e d in t w o h ei ght s o n ly vi z 8 o r 1 3 o v er ,
.
,

t o p o f ir o n a n y m an u f a ct u r e r t o hav e t h e p ri v il ege
,

o f u s i n g in p l a ce O f t h e s t ati o n ary s t a k e an a d j u s t ab l e
o r r em o v ab l e s t ak e b u t n ot b oth ty p e s
,
.

R ea ch : R ea ch c o n str u cti o n t o b e re s tri ct ed t o t he

re ct a n gu lar typ e o nly .
 SAL E S MANA G E M E NT 2 17

R ea r Gea r : O nl y o n e ge ar with b u t o n e h e ight o f b o lst er

t o b e m a d e f o r e a ch ca pa city .

Fr on t Gea r : Front ge ar t o b e m ad e in d r o p , s li p o r c oa ch
t ongu e type .

Wagon B ox es Wa go n b o x e s t o b e m ad e in o n e wid th
.

o n ly viz 3 8 b etwee n b ol s t er s t ak e s a n d with o u t

"
.
, ,

f oot b oa rd s
- 1
.

T h e E x e t e r W a go n C o m p a ny , m a n u f act ur e rs o f
farm w ago ns , l o ca t ed in a l a r ge c ity o n t h e O hi o R iv e r ,
with a m a rk e t in n ei ghb o rin g st a t e s , r e d u c e d t h e n u m
b er o f fr o nt a n d r ea r gea rs in its p r o d u ct fr o m 254 t o
1 6 in acco r d a n ce with this s ch e d u l e Af t e r th e c l o se .

o f t h e w a r , a l o ca l d em a n d f o r d is ca r d e d typ e s o f f a rm

w ago ns still p ersist ed in p arts o f th e co m p any s s a l es ’

t errit o ry T h e l ar ge im p l em e nt m a n u f a ct u r e rs h a d
.

a nn o u n ce d th a t th e y h a d d eci d e d t o a d h e r e p e rm a

n en t ly t o this s c h e d u l e Th er e w a s a wi d es p rea d s e nti

.

m e nt a m o n g m a n u f a ct u r e rs th a t th e s ch e d u l e sh o u l d
b e u nive rs a lly f o ll o w ed .

Wh a t a ttit u d e S h o u l d th e E x e t e r W a go n C o m p a ny
ta k e t o war d t h e co ntinu e d O bs erva n ce o f this s ch ed u l e ?

136 . SA G I N A w P AI N T CO M P A N Y —
V AR I E T Y O F P R O DU C T S
T h e f o ll o win g s ch e d u l e f o r c o ns e rva ti o n w as iss u e d
by th e C o m m e r ci a l E co n o m y B o a r d o f th e C o u n cil o f
N a ti o n a l D efe ns e J a n u a ry 2 1 , 1 9 1 8 :

T o t h e P a i n t a n d Varni sh M a n u fa ct u r e r s O f t h e Un it e d St a t e s :
T h e C o m m e r ci a l E c o n o m y B o a r d h as n o w co m pl e t e d it s
i n q u iry r ega r d i n g pra cti ca l e co n o m i e s in t h e P a i n t a n d
V arn i sh i n d u st ry in o r d er t o co n s er ve l a b o r a n d m a t eri al s
a n d t o l e ss e n t h e a m o u n t o f c a pit a l ti e d u p in m a n u fa ct u re r s
’

1 u
S im ila r s c h e d les w e re iss ue d at t hes a m e t im e fo r V alle y Wa go n s
.

a n d G e a rs , M n t a i n Wa g ns
ou o and G ea rs O n e l l o rs e Wa go ns a n d
,
-

G e ars , a n d Fa r m T r u ck G e ar s .
2 18 MARK E TIN G PR O BL E M S
an d re tail er s s to ck s Thi s inqu iry h as cover ed th e req u ir e
’
.

m e n t s o f t h e go vernm ent a s we ll a s t h e int eres t s o f a ll t h e

b ra n ch es o f t h e ind u stry I n a s m u ch a s large q u antiti es o f
flaxse ed f o r li n s eed O il a n d t in f o r co n t a iner s a r e b r o u ght
,

fr om a b r oad i n shi p s it i s e s pe ci a lly n eces s ary t o h u s b an d

,

o u r r e s o u r ce s o f t h e s e m at e ri al s in o r d e r t o li ght en t h e

d em an d s u p o n s hi pp ing .

T h e B o ard th er efo r e r eq u e st s pa i n t a n d v arni sh m anu

f act u r er s t o r ed u ce the ir li n e s f o r t h e r et ail trad e in a ccor d
a nce with t h e f o ll o wi n g r e co m m e n d a ti o n t o t ak e e ff ect
J u ly 1 19 1 8 :
,

St ai ns

Hou se P ain t P e n e tr atin g or Spir it

Flat P ain t Stain s .

E n am els Oil C olors

Flo o r P ain t Ar chit e c t u r al ( I n
P or ch P ain t te r ior E xteri or )
Roof an d Barn P ain t Au to a n d C arria ge
Shin gle Stain s Varn ish es an d
C arri age P ain t . Jap an s
M ar in e Varn ishe s
. .

Varn ish Stain s Mis cellan e ou s

Varn ish es 0 0 0 0 0 0 0

(Al l o f th e ab ove sive o f (Un der the last h

are e clu x g it is
black o r white e x ce pt Oil colo r s u n derstoo d t h at all var ni she s ar e
,

Un der th e h eadin g Oil C olor s in in clu ded th at ar e n ot spe cifically

r e com m en din g a m axim u m n u m m en tion ed in th e fir st thr ee
be r o f 30 it is u n der s to od th at clas ses a n d in ad ditio n j apan s
, , , ,

black s ar e in clu de d ; b u t sh a d es dr ier s as ph altu m s e tc )

, ,
.

su ch as Light M ed iu m o r D ar k
,

in t he var iou s colors ar e n o t

in clu d ed ).

M a nu fa ctu rers a r e f u rther re qu e s t e d t o e lim i n at e t h e

f o llowi n g s iz e s o f can s :
H alf gallon cans thro u gho u t t h e en tir e li n e o f pai n t s a n d
-

v arni sh es .

All can s s m alle r th an h alf p i n t s t h r ou gh o u t t h e en tir e

-
,

line O f pai n t s a n d varni she s .

Pint can s i n ho u s e pai n t s fla t p ai n t s fl oo r paint s p or ch

, , ,

p aint s e n am el s
,
.

All can s s m aller th an gall o n s i n b a r n an d ro of p a i n t an d

Shingl e s t a in .

All cans s m all er t h an p int s in a ll cl ear v ar ni sh es an d

varni sh r em o vers .
 SAL E S MANA G E M E NT 2 19

All t wo an d thr ee -
po u n d n s in
catire li n et he en .

All u s ers o f t in co nt ai n er s ca n d o m u ch t o r e li ev e t he
s it u a ti on a n d cl ea r t h e f u t u r e b y s u b s tit u ti o n o f o th er p a ck
a ge s wh er e pr a cti ca b l e an d by n o t o ve r b u yi n g co ns i d era b ly
,

in a dva nce o f a ct u al u s e .

M an u fact u rers a r e u rge d to u tiliz e e x i s t in g s to ck s o f

c o l o r ca r d s p ri ce li s t s e t c
-
, e v en tho u gh s o m e o f th e s e m ay
,
.
,

sho w co l o r s gr ad e s o r s iz e s o f ca n s tha t will b e d ro p pe d as

,

a r e s u lt o f th e s e r e co m m e n d a ti o n s S u ch co l o r car d s a n d
.
-

pri ce li s t s ca n b e s t a m p ed t o i n d i cat e w hi c h s h a d e s o r co l or s ,

gra d e s a n d s iz e s h ave b ee n e li m i n at e d in a c co r d a n ce with

th e r e qu e s t o f t h e C o m m er ci a l E co no m y B o a rd a n d t her eb y
a vo i d was ti n g a n y m a t e r i a l s a lr ea d y m an u fa ct u r ed .

R et ail er s a r e u rged n o t t o r e t u r n t o m an u fa ct u rer s

co l o r s gr a d e s o r s iz e s o f ca n s w h i ch m a y b e d r o p p e d a s a
, ,

re s u lt o f the s e r e com m en d ati o n s .

C o m m er ci a l E co n o m y B o a rd ,

C o u n cil O f N a ti o n a l D e fen s e .

7 2- 1 000

This s ch edu l e was carri ed o u t d ur in g th e war a n d

wa s c o ntinu e d by th e tra d e by c o m m o n co n s e nt f o r an
in d e finit e p eri o d a ft er th e si gnin g o f t h e a rm isti ce .

T h e o nly e x cep ti o n wa s th e r e intr o d u cti o n o f th e h a lf

gall o n siz e o f ca ns by o n e o f t h e l ar ge st m a n u f a ct u r e rs .

T h e a cti o n o f th a t com p a ny in o ff erin g t h e h a lf ga ll o n -

siz e to its cu st om ers w as f o ll o w ed by th e r e st O f

th e tr a d e .

T h e Sa gin a w P a int C om p a ny p ri o r to 1 9 1 8 h ad , ,

m a n u f actu r e d 4 8 sh a d e s o f h ou s e p a int a n d a si m il arly

wi d e v ari e ty o f o th e r p aints Wh a t m u st this c o m
.
.

p a ny co nsi d e r in d e t erminin g wh e th e r o r n o t t o co ntin u e

t o f o ll o w this r es tri c t e d s ch e d u l e in th e f u t u r e ?

13 7 . SP A R T AN E LE C T R I C C O M P AN Y —
WATE R T UR B I N E S
T h e E ss e x M a n u fa ct u rin g C o m p a ny m a ke s w a t e r
t u rbin es a n d all th e p a rts p e rt a inin g th ere t o I t als o .
220 MARK E TIN G PR O BL E M S
m an u fa ct u r e s e l ectri ca l ma chin e ry a n d is th e r efo re able
t o b id o n co m p l e t e hy d r o e l ectri c inst a ll a ti o ns
-
Th ere .

ar e t wo o th e r l a r ge e l e ctri ca l c o m p a ni e s whi ch d o n o t

m a k e w a t e r t u rbin e s .O n e o f th es e is t h e Sp art a n
E l e ctri c C om p a ny .

Sh o u l d th e Sp a rt a n E l ectri c C o m pany e nt e r int o a n

a gr ee m ent with s o m e w a t e r t ur bin e m a n u fact u r e r t o

s ell th e l a tt e r s ou t pu t o f w a t e r t u rbin es ? Sh ou l d th e
’

Sp art a n E l e ctri c C o m p a ny act as p ri m a ry c o ntr a ct o r ,

t akin g fu ll r esp o nsibility f or all m a chi ne ry , o r s h o u l d
it p l an t o m a k e bi d s o n a co o r d in at e b a sis with th e
t u rbin e m an u fa ct u r er wh er e by th e Spa rt a n E l ectri c
C o m p a ny wou l d a ccep t res p o nsibi lity o nly for th e
l
e ec tri ca l r t
appa a u s .

1 38 DAK OT A C O M PA N Y
.
—
P LA N S OF D I STR I B UTI O N
T h e Da k o t a C o m pa ny , m a nuf a ct u rin g a f u ll li n e
o f a gri cu lt u r a l m a chin e ry , h a s d e ci d e d t o a d d f a rm
tra ct o rs to its p r o d u cts T h e com p a ny h a s wh o l e s a le
.

bra n ch es l o ca t ed a t stra t egi c p o ints f or th e di strib u ti o n

o f its ou t pu t . I ts p r o d u cts ar e bra n d ed a n d r et a il
d eal e rs h a v e b ee n gra nt e d l o ca l , e x c lu siv e a ge n ci e s for
th e m achin e s a lr ea d y m a nu fa ct u r e d .

Sh o u l d th e D a k o t a C o m pa ny di strib u t e th e trac
to rs thr o u gh its p r es e nt r e t a il d ea l e rs , o r thr o u gh
au t o m o bil e d ea l e rs ? Wh a t m u st be tak e n int o acco u nt
in reachin g a d ecisi o n ?
 SAL E S MANA G E M E NT 22 1

1 39 . E LM WH O LE SA LE G R O CE R Y C O MP AN Y —
C R E DI T
T h e E lm Wh o l es a l e
G r o ce ry C om p a ny , l o ca t ed in
St Lo u is , r e ce iv e d a n o r d e r fr o m o n e O f its s a l es m e n
.

f o r m e rch a n d is e am o u ntin g t o $ 250 T h e o r d e r was .

gi v e n t o th e s al es m a n by J G Stra w , a r e t a il gr o ce r . .

in a to wn o f ten th ou s a n d p o p u l a ti o n in s o u th ern
I lli n ois This w as th e first o r d e r th a t h a d b ee n r e ce iv e d
.

fro m M r Str a w . .

T h e f o llo win g n et w o rth st a t em ent w a s s u b m itt e d

by M r Str aw .
“

FI N AN C I AL ST AT E M E N T
Year E n din g Jan u ary 1 , 19 19 .

A s sets Li abi liti es

C as h o n han d Accoun ts P ayable 8 . .

Ac cou n t s Re ceivab le Bills P ayab le

Mer chan dise Bal an ce 1
I n v e n t ory .

E qu ipm en tI n v en tory 40

57
T h e s al esm a n ls o f ou n d th a t M r Stra w s a nn u a l
a .
’

sa l es ar e a b o u t th a t h e is t a kin g s om ewh at
le ss th a n o n e h alf o f his c ash d is c ou nts ; th a t h e is
-

b u yin g fro m a b ou t t en wh o l es al e gr ocers with o cca

s io na l s catt er ed p u r ch as es fr o m o th ers ; th a t h a lf o f
,

his b u sin ess is cr e dit ; th a t his st o ck t u rn is t im e s -

a y ea r hi s gr o ss p r o fit
,
a n d his t o t a l e x p e ns e

He d o es n o t ch a rge him s elf with m er ch a n di s e t ak e n

fr om th e st ore fo r f am ily u se .

’
T h e t own in whi ch M r Str a w s st o r e is l o ca t e d is .

in a p r o s p e r ou s d i stri ct a n d M r Stra w h as a hi gh
,
.

st a n di n g a m o n g th e m er ch a nts in th e t o wn T h e E lm .

C o m pa ny h e r e t o fo r e h as n o t s u cceed e d in s ellin g a n y
s u bst a nti a l q u a ntity o f m e r ch a n d is e in this t o wn I t .

d e sir e s to s e cu r e a l a r ge r sh a r e o f th e b u sin e ss th e r e .

Sh ou l d this o r der b e ac cep t ed ?

Re fe r e n ces o n c r e d it : R P E tt in ge r a n d D E G o li e b , C red its a nd

1 . . . .

o
C llecti o ns J E Ha ge rt y , M e r ca nti le C red it
. . . E H G ar d n e r , N ew . . .
222 MARK E TIN G PR O BLE M S
14 0 . SH E N A N D O A H P APE R C O M PAN Y —
R E LATI O N S To

J O BBE R S
T h e Sh e n a n d o a h P a p e r C o m p a ny , with a p l a nt
l o ca te d in N ew Y o rk , m a n u f a ct u r e s co a t ed p a p ers .

Th es e co a t e d pa p e rs a r e si m il a r to th e p r o du cts o f
nu m er ou s o th er p a p e r m ills , a lth o u gh o f sli ghtly b ett e r
q u a lity th a n th e p r o d u cts o f m o st o f its co m p e tit o rs .

T h e c om p a ny h as a s m a ll m ill a n d is n o t e q u i pp ed t o
o p e r a t e a s e co n o m i ca lly a s t h e b ig m i lls o n l a r ge o r d ers .

T h e Sh e n a n d oa h P a p e r C o m p a ny th e r e f o r e s p e c i a liz e s
o n s m a ll r u ns a n d m a t ch e d o r d e rs b e cau s e th e s ca l e o f

o p e ra ti o n is s u ffi c i e ntly s m a ll t o p e rm it car e fu l
s u p e rvisi o n .

T h e Sh e n a n d oa h P ap e r C o m p a ny lik e m o st o f its
,

co m p etit o rs h a s s o l d its p r o d u ct thr ou gh p ap e r j o b

,

b e rs by wh o m th e p r o du ct in t u rn is s o l d t o j o b p rint e rs .

Alth ou gh th e co m p a ny s p r o du ct is b ein g s o l d u n d e r
’

its o wn bra n d n e v erth el ess th e c om p any b e li e v e s th a t

,

in m any inst a n ce s th e j o bb ers ar e n o t givin g its p r o d u cts

th e a tt e nti o n it d e s e rv e s .

Sh ou l d th e Sh e n a n d o ah P ap e r C om pa ny e st a b lish
s ?
sa l e s br a n ch e I f s o , wh er e ?

14 1 . M A N H AT T A N P A I N T C O M P A N Y —
N E W R E TA I L
O UT LE T S
T h e M an h a tt a n P a int C o m p a ny p r o d u c e s a f u ll
lin e o f p aint s a n d v arni sh e s T h e c o m p a ny h a s
.

na tio n al d istrib u ti o n thr o u gh h ar d war e st o r es I ts .

p r o du cts ar e w ell a d v ertis e d .

O n e o f th e di r e ct o rs o f th e c o m p a ny h as p r o p o s ed
th at the p r es e nt m ar k e tin g p o li cy sh o u l d b e m o di fi ed
C olle ctio n M ethods . W A Pr e nd e rgast , C redit a nd I ts Us es A W
. . . . .

Sh aw C om p an y , Credi ts , Colle cti o n s a nd Fi na nce . R o n al d P r ess ,

M er ca n ti le C red its. N a tio n a l As s o cia t i o n O f C r e di t M en , Bu l leti n .

N atio n al Ass o cia t io n o f C re di t M e n The C red it M o nthly

, .
 SAL E S MANA G E M E NT 223

an d th a t th e co m pa ny sh ou l d s eek to s e ll its p r o du cts

to r et a il d r u g st o r es a s w e ll as t o r e t a il h ar d w a r e st o r e s .

How w o u l d s u ch a ch a n ge in p o li c y p r o b a bly a ff e ct
th e p r od u cti o n s a l e s a n d a d v ertisin g d ep art m ents o f
, ,

th e M anh att an P a int C om p any ?

142 . P O N T I AC M I LL I N G C O M P A N Y —
E LK WH O LE SA LE
G R O CE R Y C O M P A N Y
T he P o nti ac M illin g C o m p any o f D u l u th h a s a
capa city O f b ar r els O f fl ou r d a ily This is .

a m e d i u m siz e d p l a nt
-
T he com p a ny s e lls th e fl o u r
.

th a t it m an u fa ct u r e s e ntir e ly to wh o l es a l e gr o cers .

A p orti o n o f th e p r o d u ct is s o l d u n d er t h e P o nti a c
br a n d a n d th e r em a in d e r u n d e r wh o l es a l ers p riv a t e ’

bra n d s T h e m a rk et o f this co m p a ny is a lm o st
.

e x cl u siv e ly in th e M i d d l e W e st .

A m o n g th e cu st o m ers o f th e P o nti a c M ill in g C om

p any is th e E lk Wh o l e sa l e G r oc e ry C om p a ny O f St .

P au l This wh o l es a l e gr o ce ry c o m pa ny h as b een p ur
.

ch a sin g a b o u t b arre ls o f flo u r a y ear fr om th e

P o nti ac M illin g C o m p a ny .

I n A p ril 1 9 20 th e P o nti a c M illin g C o m p a ny

, ,

r ece iv ed th e fo ll o win g l e tt er a n d st a t em e nt fr o m th e
E lk Wh o l e s a l e G r o ce ry C o m p a ny o ff erin g t h e P o nti a c
,

M illin g C om pa ny a n o p p o rt u nity t o b u y p r e fe rr e d
st oc k in th e wh o l es al e gro ce ry co m p a ny T h e P o nti a c
.

M illin g C o m pa ny is a p r o fit a bl e b u sin e ss h avin g p a i d ,

regu l a rly 8 % d ivi d e n d s fo r s e v e r a l y e a rs a n d a t t h e

sa m e tim e accum u la tin g a s u rp l u s I t is a cl o s e co r
.

p o r a tio n T h e co m p a ny ca n p u r ch a s e o n e h u n d r e d
.

sh ar es o f th e E lk Wh ol e s a l e G r o cery C o m p a ny s ’

p r e f err ed st o ck with ou t s e ri o u sly d e p l e tin g its w o rkin g

cap it a l .

Wh a t r ep ly sh o u l d b e giv e n t o this l ett e r fr o m th e

E lk Wh o l e s al e G r o cery C o m p a ny ?
224 MARK E TIN G PR O BL E M S
E LK WH O L E SAL E G R O C E RY C O MPAN Y
St P a u l Mi n n e s o t a
.
, .

A pril 2, 1920 .

P o ntia c Milli n g C om pan y ,

D u l u th Mi n ne s o t a
,
.

G e ntl e m en :
I n ci d en t t o t h e u nu s u al s al es in cr eas e o f t h i s b u s i n e ss
d u ri n g t h e yea r s 19 1 8 a n d 1 9 1 9 wh en a n a dd iti o n in v o l u m e
,

a m o u n ting to w a s a d d e d t h er e t o w e h a v e ,

gra d u ally com e t o t h e r e q u ir em en t o f a d d ed ca p it a l wh i ch ,

w e p r o p o s e t o O b t a i n f ro m t h e s a l e o f a n i ss u e o f O n e Milli o n
D ollars 7 G u ar ant e ed C um u l ative Pr eferre d St o ck .

Th ere ar e two re a so n s why w e h ave s et as i d e a part o f

this i ss u e t o b e t ak en b y o u r m anu fa ct u rin g fri end s Fir s t .
,

b e cau s e o f t h e u nu s u al s e cu rity an d fair e arni ng u p o n t h e

s t o ck an d s e con d b e ca u s e o f t h e hi gh gr a d e s ervi ce in d is
, ,
-

t r ib u t ion whi ch thi s i n s tit u ti o n at a ll ti m e s h as a ff o r d e d

l egiti m a t e m an u fa ct u rer s i n tere s te d in th e trad e aff air s o f
thi s t errit ory .

A ss ur i n g yo u that th e f u t u re adm i n istrati o n of o u r

bu s i n e s s will b e co n d u ct e d in pro p er re s p e ct t o a n y m at eri al
c o n s i d er ati o n o ff e r e d I b e g t o ca ll y o u r r e s p e ct f u l att e nti o n
,

t o t h e encl o s e d d at a .

V ery tr u ly yo ur s ,

( s i gn ed ) Willi am P arker ,

Pr e s id ent .

C O NTRA C T O F PUR C HA SE
A u thoriz ed C ap it al P ar V al u e
P er Shar e
E LK WH OLE SALE GR O C E R Y C O M P AN Y
St P au l , M inn eso ta
.

I hereb y pur ch as e sh ar es o f Ser ie s A P r eferr ed

C ap it al Stock of t h e E LK WHOLE SALE GR OC E R Y C OM P AN Y
”

O F ST P AUL, M I N N E SOT A ,
.

an d h e r eb y p ay t h er efo r t h e s u m o f per sh ar e in cash .

A s soon as this s u b s cr iption is accepted b y t h e C om pan y a

C er tificat e t h er eon i s t o be iss u e d t o m e of th e d ate o f this s u b
s crip tion sh owin g th at s aid s to ck is fu lly p aid an d n on assessable, -

with in ter es t a ccru in g at t h e r a te o f 7 per cen t fr om ab ove d a te . .

I h er eb y f o r m y h eir s , e xe cu tors an d as sign s , irr ev o cably

a pp oin t t h e p r esid en t o f t h e E lk Wh ole sa le Gr o cery C om p an y as
m y a gen t an d a tto rn ey i n f act t o v ote a ll sto ck issu ed to m e un d er
thi s su b s cr ip tion in f a v o r o f r en e win g t h e p r esen t corpo r at e exis t
e n ce o f t h e C om p an y as p r ovid ed f or b y l aw u p on t h e e xp ir ation
o f its ch a r ter .

I n cas e I d es ir e to s ell a t an y tim e all or an y p art o f m y s tock ,

I agr ee t o n otify t h e C or poration o f su ch in ten tion an d give it the
o pp or tun i ty
t o pu r ch ase s a m e .

T h is con t ra ct a n d a gr e e m en t is n o t b in d in g u p on th e C o rpo r a
t ion u n til a ccepted b y it b y wr itten n o tice t o the pu rch as er an d n o
 SAL E S MANA G E M E NT 225

co n d it ion s o th er th an t h o s e pr in te d h ere in s hall b e b in d in g on th e

C o m pa n y .

St P au l, M in n
. .
,
M ar ch 27 th ,
1 9 20 .

TO THE P UBLI C :
I n con n e ct io n w ith our offer o f 7 % C u m u lat iv e
Series A P r ef err e d S to ck o f t h is co m pa n y , I t ak e ple as u r e in giv in g
you t he f o ll owin g inf or m at io n :
T HE P R E FE R R E D S T OCK
T h e P r efe r r ed St o ck is p r eferr e d a s t o ass e ts a n d d iv ide n d s ;
n o n - as s essable ; d ivid en d s a r e cu m u lat iv e an d p a ya ble s e m i
an n u a lly , M ar ch 1 5th a n d Septe m ber 1 5th R e tire a ble a t 1 05
. .

P ar Valu e p er s h a r e .

T h is i n s t itu tio n w as f ou n d ed in 1 88 5, 35 ye ar s a go T he .

p r es e n t e xe cu t ive o fficer s a n d m a n a gem e n t h av e b ee n in ch ar ge

d u r in g th e p as t 25 year s , a n d a r e r es po n s ible f or th e p oli cy w h i ch
h as d ev elope d th e b u sin ess t o its p res en t la r ge p r o po rt ion s .

T h e C om pan y co n du ct s a Wh o les ale G r o ce ry , C a n d y, C o ff ee

a n d N o tion b u s in ess , i n clu d in g a f u ll gr o ce r y lin e , c an d y f a ct O I y .

c o ff ee r o as tin g pla n t , a n d m an u fa ct u r e s a n d p a ck s its o wn P a n cak e

Flou r s , Sp ice s , E xt r act s , Jellies , Ja m s , P r ese r v es , e t c .

T h e E lk Wh oles ale G r ocer y C o m pa n y is o n e o f the lar ges t

wh oles ale gr o cer s in t he w es t I t s pla n t co n s ists o f tw o w ar eh ou s es ,
.

o n e o f s ix s to r ie s a n d b a sem e n t ; t h e o t h e r o f e igh t s t o r ie s a n d b a s e
m en t ; th e s am e t o t alin g s qu a r e fe et o f flo o r s pa ce T h e .

two b u ild in gs ar e a d j a cen t , t h e a lley b e twe e n t h e m b e in g b ri d ged

at t h e 2n d , 3 r d , 4 th , 5th a n d 6 th floo r s , w h ich m ak e s t h e e n t ir e

plan t co m p act a n d f a cilita tes q u ick an d e co n o m ical ha n d lin g O f

m erch a n dis e T h e lo cat ion o f t h is p r o pert y is o n e o f t he ch o ice s t
.

in St P au l f o r wh o lesale p u r po ses , w ith a m ple t ra ck a ge

. .

T h e com pan y s w ar eh ou ses a n d fa ct or ie s a r e e qu ipp e d th r o u gh

’

o u t wi t h Spr in kl er s ys tem an d t h e l a test d e vi ce f o r h a n d lin g goo d s

b y ch u te s , co n veyo r s , e lev a to r s , e t c D e pr e cia tio n c h ar ge s a r e
.

m ad e t o t h e f u ll e xte n t allow e d b y t h e U S G o v ern m e n t

. . .

T h e co m pa n y s tr avelin g s ales f or ce cov e r s a wi d e s co pe o f

’

te rr itor y, in clu d in g M in n eso ta , Wis co n sin , I o wa , So u th D ak o ta ,

N or th D ak o ta , N eb ras k a , a n d p ar ts o f M o n t an a a n d Wyo m in g .

T h e co m pan y s m ain h o u se is a t St P a u l I t is a t p r es en t
’
. .

con d u ctin g a b r a n ch h ou s e a t Sio u x Fa lls S D a k . T his b ran ch

. .

w as O pe n e d last N ovem b er , an d h as d e v e lo ped v e ry r a pi d ly s i n ce

that tim e .

THE OR GAN I Z A TI ON
T h e co m p an y e m plo ys a p pr ox im ately 4 25 p e o ple t o c o n d u ct
it s b u sin ess Al l th e exe cu tiv e h ea d s h av e b e e n w ith t h e i n s t i
.

t u t io n f o r m a n y ye a rs , a n d will co n tin u e t o h a n d le a n d d ire ct t he

aff air s o f th e b u sin ess .

TR ADE M AR K S
T he com pan y h as , d u r in g th e pas t 25 ye a r s , d e v elo pe d a li n e
o f tr ad e m ar k s w h ich ar e k n own in e v ery h o m e i n i ts t r a d e t err i
to ry, a n d are O f i n es tim abl e v alu e T h e b e st k n own a re as fo llo ws :
.
226 MARK E TIN G PR OBL E M S
The E lk T h is is o u r h o u s e t r ad e m a rk , a n d appe ar s o n all
.

ou r p a ck ages a n d la b els I t s tan d s as o u r gu aran t ee o f qu ality

.

a n d value .

C a n n ed Goods
G old e n Hou r G o ld e n Hou r
Yellowston e Yello wst o n e
N o r t h Star N or th Sta r
E x cels io r Su n r ise
P in e T r ee Arr ow
CAP I TALI Z A TI ON
C a pital Sto ck , P r eferred
C o m m o n St o ck .

Su r plu s
ASS E TS
T h e assets o f th e co m p an y Ja n u ary l s t , 1 920, wer e
With t h e n ew ca pital t h at this issu e o f P r eferr ed Sto ck will provid e
t h e a ss e t s will a ppr o xi m ate $ 350 f or e a ch sh ar e O f P r eferr ed Sto ck .

I N VE N T OR Y
M er ch an d ise is always in ven toried at co st o r m ark et , W hi che ver
is l ower a t in v en to r y t im e .

GR OS S SALE S
T h e t o t al s ale s o f th e co m pan y f o r 1 9 1 9 wer e b etween
an d D u rin g t h e year 1 9 1 9 we u nl oad ed a t ou r p lat
f orm s 8 26 f u ll car s O f m er ch an d is e Appr o xim ately
. carload s
cam e t o u s in le ss th an carload s .

T URN O VE R
T h e co m pan y s tu rn over is s tim e s
’
u n u u ally large , b ein g
th e am ou n t o f s to ck carr ied .

E AR N I N GS
Af ter t h e P refer red Sto ck d ivid en d s are paid , n o m or e th an 7 %
can b e p aid t o t h e C o mm on St ock , t h e r e m ain d er go in g t o t h e
Su r plu s in su pp or t of in ter ests o f t he P r eferr ed Sto ck ou ts tan d in g .

DI S CO UN TS
T h e co m p an y d is co u n ts all b ill s ; d elin qu en t a ccou n t s r eceivable
ar e ch ar ge d o ff ev e ry s ix m on th s T h e com p an y s cr e d it lo ss e s ar e
’
.

p r act i cal ly n o th in g, b ein g l e ss t h an o n e -

h alf o f 1 % d ur in g 1 9 1 9 .

I N S UR AN CE
Su ffi cien t fir e t or n ad o a n d s pr in kler ins ur an ce ar e carr ied at
,

all tim es t o f u lly pro te ct th e s to ck o f m er ch an d ise an d war eh ou se s .

 SAL E S MANA GE M E NT 227

14 3 . DI R I GO P O WE R C O M P AN
Y —
SP A R T AN E LE C TR I C
C O MPAN Y
T h e D ir i go P o w e r C o m p a ny f u rni sh e s a l a r ge p o r
ti o n o f th e p ow e r s o l d fo r h o u s eh o l d a n d c o mm er c i a l
u s e in o n e O f t h e l ar ge c iti es in t h e Unit e d St a t es This .

c o m p a ny d es ir e s t o d e v e l o p a ll br a n ch e s o f its c entr a l

st ati o n b u sin ess R ecently , it w a s p r ep ar ed t o m ak e

.

a r e ci p r o ca l a rr a n gem e nt with t h e Sp art a n E l ec tri c

C o m p a ny t o t h e f o ll o win g e ff e ct T h e D iri go P o w e r
.

C om pa ny w as t o p u r ch as e a ll e l ectri cal m a t eri a l fr o m

th e Sp a rt a n E l e ctri c C o m p a ny , p ro vid e d t h e l a tt e r
wo u l d r efra in fr o m s ellin g m at e ri a l a n d s u p pli e s t o
is o l at ed p l ants i n t h e d istri c t s e rv ed by th e D iri go
P o w er C o m p a ny T h e Sp a rt a n E l ectri c C om p a ny is
.

o n e O f t h e l a r ge m a n u fa c t u r e rs O f e l e ctri ca l e q u i p m e nt

a n d s u p p li e s in t h e Unit e d S t a t e s .

Sh o u l d t h e Sp art a n E l ectri c C om p a ny h a v e e nt er e d
int o this agr eem ent with th e D iri go P o wer C o m pa ny ?

144 . V O LT E L E C TR I C C O M P AN Y —
I M P R O VE D D E S I G N
OF P R O DU CT
T he V o lt E l e ctri c C o m p a ny is o n e o f t h e l a r ge
m an u fa ct ur e rs o f e l ectri ca l m a c hin ery a n d s u pp li e s .

This c o m pa ny e nt e re d th e st ea m t u rbin e fi e l d l a t e a n d
u n d e rt o o k t o d e v e l o p this br a n ch o f its b u sin e ss as

r ap i dly as p o ssibl e I t s o l d a l ar ge n um b e r o f st e a m
.

t u rbin e s o f its e arly d e si gns L a t e r this co m pa ny

.

intro d u ced s e v e ra l i m p r o v em e nts a n d was a bl e t o

m a n u fa ct u r e t u rbin e s th a t w er e s u bst a nti a lly m o r e
e co n o m i ca l in o p e r a ti o n T h e i m p r o v e d t u rbin e s w e r e
.

a d v a nt age ou s t o c u st o m ers in k e ep in g d o wn t h e co a l

e x p e ns e . T h e ea rly t u rbin es h o w e v e r w e r e ru gge d

, ,

a n d d u r a bl e a n d d id n o t r e q u ir e r e p l a cem e nt e x cep t ,

fo r r eas o ns o f e co n o m y in O pe ra ti o n .
228 MARK E TIN G PR O BL E M S
Wh a t p o li cy sh o u l d th e V o lt E l ectri c C o m p any h a v e
a d o p t e d f o r t h e p r o t e cti o n o f cu st o m ers t ak in g t h e risk

o f p u r ch a s e o f t h e e a rly d e si gns o f st eam t u rbin e s

m an u fact u r e d by this co m p a ny ?

14 5 . LA C K AW A N N A C O M P A N Y FUT UR E S IN CAN N E D
G oon s
T h e f u t u r e s syst em h as b ee n u s ed fo r m a ny y ears
in th e s a l e O f c an n ed fr u its an d v ege t abl es A ccor din g
.

t o this syst em , in J a nu ary a n d Febr u a ry o f e ach y e ar

ca nn e rs c o ntr a ct with wh o l e s al er s a n d o c casi o n ally

with l ar ge r et a il ers f or th e b u lk o f th e goo d s th a t t h e

c a nn ers e x p e ct t o p ack d u rin g t h e f o ll o win g s umm e r .

T h e wh o l e sa l ers a t th e sa m e tim e c o ntr ac t with r e t ail

er s f o r ca nn ed go o d s t o b e d e liv e r e d in t h e f o ll o w in g

O ct o b e r .T h e p ri ce t o b e p a i d by t h e r e t ail e r is s p eci
fied in th e c o ntr a ct , b u t th e r e t ail er c omm o nly is gi v e n
a gu a ra nt ee a ga inst a d ecl in e in p ri ce . Un der th ese
co n d iti o ns , if t h e s p o t p ri ce is l o w e r in O c t o b e r th a n

th e p ri ce n am e d in th e co ntra ct , t h e r e t a il er p a ys fo r
“ ”
his fu t u r e s a t th e s p o t p ri ce Pr o visi o n is a lso
.

c o mm o nly m a d e in th e s e fu t u r es c o ntr acts for th e

“ ”
s ell e r t o d eliv e r p r o r at a o n all fu t u r e s c o ntracts , if
th e c r o p is s m a ll .

R e t a il e rs h a v e b ee n in du ce d t o b u y fu t u r es in
ca nn e d go o d s in o r d e r t o p r o t e ct th em s e lv e s o n s p eci a l

hi gh gra d e bra n d s T h e tr ad e in th es e br an d s , h ow
-
.

e v e r , c o nstit u t e s o nly a s m a ll p a rt o f t h e s a l e o f ca nn ed
“ ” “ ”
go o d s f u t u r es t o r e t a il e rs T h e p u r ch a s e o f f u t ur e s
.

in ca nn ed go o d s by r e t a il e rs h as b ee n e n cou r a ge d o n
th e th eo ry th a t t h e r et a il e r th e r eby s a v e d m o n e y by
s ecu ring l o w er p ri ce s T hi s th eo ry h as b ee n wi d e
.

sp read am o ng r e t ail ers a n d wh o l es a l e rs I t h as b ee n

.
 SAL E S MANA G E M E NT 229

d isp r o v e d , h o w e v e r , by a st a tisti ca l st u d y o f p ri ce s o f
ca nn ed goo d s Thi s st u d y o f th e s ea s o n a l flu ctu a
.
1

ti o ns in th e p ri ce o f st a n d ar d ca n n ed fru its a n d v e gs
t abl es sh ow e d th a t t h e a d va n ces in p ri ce s in a few
s eas o ns w er e O ffs e t by th e d e clin e s in o th e r s eas o ns .

I n gen e ra l , th er e app ear e d to b e littl e fl u ctua ti o n .

T h e L ack aw a n n a C o m p a ny , a typ i ca l wh o l e s a l e
g r o ce ry b u sin e ss , d u rin g t h e l a st thr ee y e a rs h as
“
b o u ght o n th e a v era ge ca s e s o f fu t u r e s in
’
ca nn ed fru its a n d v e ge t a bl e s ea ch y e ar T h e fir m s
.

sp o t p u r ch as e s o f ca nn e d fr u its a n d v e ge t abl e s h a v e
”
a v e r age d a b o u t ca s es a y ear .Fu t u r es s o l d t o
r e taile rs d u rin g th es e thr ee y ea rs h a v e a v e ra ge d
ca s e s . This fir m is o p er a tin g u n d e r o r d in a ry co n d iti o n s
in a n e ast e rn c ity o f p o p u la ti o n T h e . s ur

r ou n d in g t e rrit o ry in clu d es p r o s p e ro u s m a nu f act u rin g

an d a gri cu lt u r a l distri c ts T h e t o t a l s a l e s o f all
.

m e r ch a n d is e o f this fir m a r e a b o u t a y ea r .

Why sh o u l d th e L a ck aw a nn a C o m p any f o ll o w thi s

“ ”
p o li c y in b u yin g f u t u r e s in c a nn e d g o o d s ? I s t h e
“
co m p a ny j u stifi e d in s e llin g fu tu r e s to its r et ail
cu st o m e rs ?

14 6 . A N N I S QU AM P A P E R C O M P AN Y —
FO R E I G N O R DE R S
T h e A nn isq u a m P ap e r C o m p a ny h as a s m a ll p l a nt
f or m a n u f a ct u rin g p ap e r I ts p r o d u ct is m ai nly co at e d
.

p a p er D u rin g t h e w ar t h e co m p a ny d e v e l o p e d a n
.

e x p o rt tr ad e with Sou th Am e ri ca , es p eci ally with

V e n e z u e la T h e p a p e r e x p o rt ed to V e n e z u el a was
.

u se d chi e fly in t h e m a n u f a ct u r e o f c i gar e tt es .

1 T h is st u d y w a s m ad e b y o n e o f th e st u d e n ts
in t h e H a r v a r d
G r ad u a t e S ch oo l o f B in e us ss
A d mi ni a i o
str t n , a n d t he res ul ts O f hi s
in v e st iga t io n s were e m b odi ed i n hi s u
gr ad a t io n t hesis .
23 0 MARK E TIN G PRO BL E M S
D u rin g th e first h a lf y e a r in 1 9 20, t h e d om e sti c
-

d em a n d fo r t h e p r o d u c t O f th e Annisq u am P ap e r
C o m p a ny w as h ea vy .I n th e d o m esti c tr a d e th e c om
d d h e l a r ge j o b
’
p a n y s p r o u ct w a s s o l p ri m a rily t o t
T h e c o m p a ny s c ap acity was in ad e q u a t e t o
’
p rint e rs .

t ak e ca r e b o th o f t h e f o r e i gn a n d th e d om esti c b u sin ess .

A t th a t ti m e th e f o r e i gn b u sin e ss was m o r e p r o fit abl e

th a n th e d o m esti c b u sin ess , b u t th e c om p a ny f o r e sa w
th a t e v e nt u a ll y th e p r o fits in th e f o r ei gn b u sin e ss w o u l d
p r o b a bly n o t e x ce e d th o s e i n th e d o m e sti c tr ad e .

Wh a t p o li cy sh o u l d t h e A nnisqu am P ap e r C o m p a ny
h a v e p u rs u e d with r e ga r d t o th e o rd ers fo r p ap e r fr o m
V e n e z u e l a i n 1 920 ?

14 7 . B LA C K S T O N E C O M P AN Y
—
N E W BR A N C H E S
T h e B l ackst o n e C o m p a ny is a w ar e h o u s e dis tr ib u
to r o f ir o n a n d st e e l p r o d u cts , i n cl u di n g s tru c t u r a l
st eel , p l a t e s an d b ar s , t u b es , bl ack a n d galv a ni z e d
sh eets , in t e n d ed fo r fabri catin g an d m a nuf a ct ur in g
pu rp o s e s T h e t o t a l s a l e s o f th e Bl a ckst o n e C om p a ny
.

ar e a y e ar .T h e C o m p a ny o p er a t es w ar e
h ou s es in St Lo ui s , D etr o it , Bu ffa lo , N ew Y o rk , an d
.

C hi cago .

T h e chie f f ea tu r e s o f this b u sin ess ar e th e b u yin g

o f st e e l p r o d u cts , st o rin g th em in l o n g l e n gths , a n d th e n

distrib u tin g t h e p r o d u cts in sh o rt l e n gt hs t o m e e t cu s

’
t om ers r e qu ir em e nts T h e B l a ckst o n e C o m p a ny p a ys
.

t h e s am e p ri ces t o th e st e e l m a nu f a ct u rin g com p a ni e s

f o r its p u r ch a s es a s ar e p a i d by wh o l e s a l e co ns u m e rs
b u yin g di r ectly fr om th e m a nu fa ct u r e rs I n s e ll in g
.

th e B l a cks t o n e C o m p a ny r ece iv e s a m a r gin o f $ 1 5 p er

to n o v e r th e p ri ce p ai d t o t h e m a nu fa ct u r er . This
m ar gin co nstit u t e s t h e gr o ss p r o fit o f th e C o m p any ,
 SAL E S MANA G E M E NT 23 1

an d fr om it all exp ens es for s e llin g h a n d lin g int er e st , , ,

a n d o th e r it e m s m u st b e m e t a n d n e t p r o fit d er iv e d .

T h e B l a ckst o n e C o m p a ny h as b u ilt u p its b u sin e ss

m a inly o n s e rvi ce in f u r n ishin g s p e ci a l si z es a n d a ls o
,

in b ein g abl e t o m ak e i mm ed i a t e d e liv e ry T h e s hi p .

m e nts a r e m a d e by this C o m p any i mm e d i a t e ly u p o n

r ecei p t o f o r d ers wh er eas o r d ers p l aced with m ills
,

o r d in arily h a v e t o b e m a nu fa ct u r ed acco r d in g t o
s p e cifi ca ti o ns b e fo r e shi pm e nt .

Pri ce s ar e q u o t ed by th e m a n u fa ct u r ers a n d by this

C o m p a ny o n th e Pittsb u r gh B asin g P o int Syst em 1
.

T h e B l ackst o n e C om p a ny a dd s $ 1 5 p er t o n t o th e p ri ce
d e t e rm i n e d by t h e Pittsb u r gh B a sin g P o int q u o t a ti o n .

A pr ob l em h as a ris e n with r e gar d to a ddi ti o na l

w ar eh o u s es Sh o u l d th e B lackst o n e C o m p a ny e st ab
.

lish w a r eho u s e s in s u c h citi e s a s B o st o n Phi l ad e l phi a , ,

C l e v e l a n d C in cinn a ti a n d s o o n ? T h e C o m p a ny n o w
, ,

m ak e s shi p m e nts t o th es e d istri cts fr om its e st abl ish e d

w a r eh o u s es .

A t th e p r es e nt tim e th es e d istri cts a ls o ar e s erv ed

by w ar eh o u s e s O f com p e tit o rs b u t th e st a n d ar d o f
,

s e rvi ce is n o t e q u a l t o th a t o f th e B l ackst o n e C om p any .

Th e s e d istri cts ap p a re ntly affo r d a l u cra tiv e m ark e t ,

b u t f or th e Bl a ckst o n e C om p a ny t o e st a blish w a r e
h ou s e s in th es e c iti e s w o u l d cu t int o th e t errit o ri es
s erv ed at th e p r e s e nt tim e by th e N ew Y o rk B u ff a l o , ,

D etro it a n d C hi ca go w a r eh ou s es
,
I n te n s ifie d s a l e s
.

e ff o rt w ou l d b e n e ce ss a ry in th e cu rt a il e d t e rrit o ri e s

t o o ff s e t th e l o ss in th e ir s a l e s in ci d e nt a l t o th e
e st ablish m e nt o f a dd iti o n a l w a r e h ou s es .

A t th e p r e s ent ti m e if th e B l a ckst o n e C o m p a ny
,

s ells in B o st o n Phil a d elp hi a C l e v e l a n d o r C in cinn a ti

, , , ,

it is a t a d is a d va nt age b e cau s e o f th e fr e i ght d iff e r

e n t ials . T h e Phil a d e l p hi a p ri ce f o r e x am p l e is tw o
, ,

ce nts p e r t o n l e ss th a n th e N ew Y o rk Pri ce b e ca u s e o f ,

th e l o w e r fr e i ght r a t e t o Phil a d e l p hi a o n th e Pitts ,

b u rgh B asing P o int syst em T h e p ri ce a t Tr e nt o n

.
,

N ew J ers e y is t h e s am e as th e N ew Y o rk p ri ce
,
Th u s .

th e B l a ckst o n e C o m p a ny h a s a n a d v a nt age in t e rri

t o ry as far d ist a nt a s Tr e nt o n fr o m N ew Y o rk C ity ,

1
Se e Pr o ble m N o 20 1 p p 29 7 t o 3 32
.
, . .
23 2 MARK E TIN G PR OBLE M S
bu t b ey o n d th at p o int its com p e tit o rs in Phil adel phi a
h av e l o w e r fre i ght r a t e s T h e l o ca l m er ch a nts in
.
,

e a ch t e rrit o ry wh e r e th er e is n o B l a ckst o n e w a r eh o u s e ,

h av e l o w e r fre i ght ra t es fr o m Pittsb u rgh th a n th e

co m bin e d fr e i ght r a t e in cur r e d by t h e B l ackst o n e

C o m p a ny o n shi pm ents fr o m Pittsb u r gh to its

w ar eh ou s es an d th en ce t o fina l d estin a ti o n .

T h e B l a ckst o n e C o m p a ny a n d th e st eel m ills s ell t o

p r a cti ca lly t h e s am e c l a ss es o f cu st om ers in cl u d in g ,

railro ad s an d o th er tr a nsp o rt ati o n co m p ani es au t o ,

m o bil e m a nu fa ct u r e rs th e o il in d u stry a n d b u il d in g
, ,

co nstr u ct o rs Ab ou t o n e thir d o f th eir t o nn age is

.
-

stru ct u ra l st eel b eam s a n gl es a n d ch ann els A

—
, , .

b u il d e r fr e qu e ntly b u ys st e e l fo r t h e b as em e nt an d
first fl oo r o f a n ew b u il d in g from th e B l a ckst o n e C om
p a ny fo r im m ed i a t e d e liv e ry b e cau s e o f t h e l ar ge
st o cks th at this c om p any ca rri e s ; th e b u il d er o r d ers
st ee l fo r th e r e st o f th e b u il d ing fr om th e st eel m ills at
th e tim e th a t his o r d e r is giv e n t o th e B l a ckst o n e C om
p a ny f or its p o rti o n o f th e m a t e ri al I n t hi s way th e
.

b u il d er is e n abl e d t o h a v e his st o cks o f st e e l o n h an d

as r e q u ir e d T h e B l ackst o n e C o m p any a ls o s e lls l ar ge
.

q u antiti e s o f m at eri a l for p l ant m aint e n a n ce Sm all .

m ach in e sh o p s a n d sim i l ar e st ablish m e nts p ur ch as e

fro m t h e B l a ckst o n e C om p any .

T h e Bl a ckst o n e C o m p a ny d o es n o f abri ca tin g ; th at

is it d o es n o t m a nu fact u r e co lu m ns gir d ers a n d s o
, , ,

forth o u t o f stru ct ur al st eel T h e C om p a ny s ells a

,
.

ge n e r a l lin e o f ir o n a n d st ee l in cl u d in g s p e ci a lti e s s u ch
,

a s v a ri ou s gr a d e s a n d kin d s o f sh ee t ir o n hi gh s p e ed ,

st eel t o o l st e el whi ch fr e qu e ntly is s o ld in v ery s m all

,

l o ts m a chin e ry a n d b o il er sp eci alti es s u ch as fl a n ges

, ,

braces h a n gers a n d t u b e e xp a n d ers This C o m p any

, ,
.

is n o t in com p etiti o n with th e st ee l m ills I t t ak e s th e .

s m all b u sin ess th a t is n o t p r o fit able t o th e m ills .

Ab ou t 1 2% o f th e e ntir e st ee l ou t p u t o f th e cou ntry

is h a n d le d thr ou gh w a r eh ou s e d istrib u t o rs o f whi ch ,

th e Bl a ck st o n e C o m p a ny is o n e o f th e im p o rt a nt o n e s .

T h e C om p a ny ca rri es wi d e r p l at es a n d h e a vi e r
m achin e ry f o r cu ttin g th es e p l a t es th a n m o st o f th e
o th er wh o l e s a l e d is trib u t o rs in th e t e rrit o ri e s wh er e t h e
 SAL E S MANA G E M E NT 23 3

Bla ckst o n e C o m p a ny is co nsi d erin g t h e est ab lishm e nt

o f w ar eh ou s e s Th u s th e B l a ckst o n e C o m p any is abl e
.

t o r e n d e r s e rvi ce s th a t its co m p e tit o rs h a v e n o t b e e n

r e n d erin g u p to th e p r e s e nt ti m e Th e r e is a p ossibility
.

o f d e v e l o p in g n ew b u sin e ss thr o u gh s e rvi ce t o b u il d e rs

by e d u catin g th em , f o r e x am p l e , t o u s e siz es o f st ee l
p l a t e s a n d l e n gths o f ir o n a n d st e e l p r o d u cts th a t a r e

m o r e e co n om i ca l a n d ad v a nt a ge o u s T h e C o m p a ny
.

t ak e s all its cash d is co u nts , t h e t e r m s b ein g o n e- h a lf

o f o n e p er ce nt t e n d a ys , n e t thirty d a ys .

T h e q u e sti o n th a t th e C o m p a ny f a ces is wh e th e r it
sh ou l d e st ablish n ew w ar eh o u s es in o r d e r t o r e n d er
a co u ntry wi d e s e rvi ce
-
Ho w sh ou l d t h e Bl ackst o n e
.

C om p a ny p r o ceed in d et e rm inin g in w h i ch , if a n y , o f
th e s e d istri cts wa r eh ou s es sh o u l d b e est ablish e d ?

14 8 . R O YA L P O R T LAN D C E M E N T C O M P A N Y
T he R o y a l P o rtl a n d C e m e nt C o m p a ny s e v er a l
year s a go faced a s eri o u s p r o bl em in t h e d istrib u ti o n
o f it s p r o d u c t d u e t o t h e in c r ea sin g c o m p e titi o n a n d

th e f a ll in t h e p ri c e O f P o rtl a n d ce m e nt .

T h e p r o d u cti o n o f P o rtl a n d ce m e nt in th e Unit e d

St a t es in cr e a s ed fr o m b a rr e ls a y ear in 1 880
to b a rr e ls a y e ar in 1 89 6 , a n d t o
b a rr e ls a y ea r i n 1 9 1 3 I n 1 9 1 8 u n d e r w ar c o n d iti o ns ,
.

th e a nn u al p r o d u c ti o n w a s b arr e ls .

T h e p ri ce o f P o rtl a n d ce m e nt d r o pp e d fr o m
a b a rr e l in 1 88 0 t o a b a rr e l in 1 909 Fr o m 1 9 09
.

t o 1 9 1 3 t h e p ri c e r a n ge d fr o m to a b ou t
a b arr e l .

T he r ap i d gr o wth o f th e in d u stry in t h e tw o d e c
a d e s p ri o r t o th e G r ea t Wa r a n d t h e a cco m p a nyi n g f a ll

in p ri ce O f P o rtl a n d ce m e nt w e r e ca u s ed p rim arily by

t echni ca l i m p r o v e m e nts in t h e in d u stry This w as th e
.

p eri o d o f th e inv e nti o n a n d intr o d u cti o n o f th e n ew

2 34 MARK E TIN G PR O BLE M S

p r o ce ss f o r b u rnin g p u lv e ri z e d co a l in th e r o t a ry
c em e nt kiln T h e a d o p ti o n o f this inv e nti o n r e su lt e d
.

in a l a rge s a vin g in la b o r c o sts an d a ls o m a d e p o ssibl e

th e u tiliz a ti o n o f v a st st o r e s o f r aw m a t e ri a l in p r ac
ti cally a ll p arts o f th e Unit ed St at es A n o th e r s o u r ce
.

o f P o rtl a n d c em e nt w as o p e n e d u p d u rin g this p eri o d

by th e u tiliz a ti o n o f bl ast f u rn a ce sl ag whi ch hith ert o

h a d b e en a tr ou bl es o m e w a s te p r o d u ct T h e Univ ers a l
.

P o rtl an d C em ent C o m p any whi ch is a s u bsi di a ry o f

,

th e Unit e d St a t e s St ee l C o rp o ra ti o n h a d a n a nn u a l
,

ca p acity in 1 9 1 4 o f b a rr els o f P o rt l a n d
c em e nt a ll p r o d u ce d fr o m bl a st f u rn a c e sl a g
,
.

T h e R o y a l P o rtl a n d C em e nt C o m p a ny o p er a t e s
p l a nts l o ca t ed in th e Lehi gh d istri ct e q u i pp e d with ,

u p t o d a t e m a chi n e ry
- -
Up t o 1 9 1 0 this co m p a ny h a d
.

b ee n o n e o f th e l ea d ers in th e in d u stry I t d e sir e d t o .

m a int a in its p o siti o n .

Wh a t c o u rs e o r cou rs es o f a cti o n w ere o pe n t o th e

co m p a ny ?

14 9 . P E N O B S C O T C OM P AN Y —
M AR K E T AN A LY SI S
T he P e n o bs co t C om p a ny m a nu fa ct ur e s w a t e r
wh e e ls o f all si z e s a n d f o r p r acti cally a ll th e p u rp o s e s
f o r whi ch w a t e r wh ee ls ar e u s e d T h e c o m p a ny is
.

e q u i p p e d t o m ee t th e r e q u ir em e nts o f u s e rs o f w a t e r

wh ee ls in all p a rts o f th e w o rl d .

Wh a t ar e th e m a in p o ints f or co nsi d era ti o n i n

a n alyzin g th e m ark e t f o r this co m p a ny s p r o d u c t ?
’
 SAL E S MANA GE M E NT 235

1 50 E SK I M O ST O V E C O M P AN Y
.
—
M AR K E T A N A LY S I S
How sh o u l d th e E skim o St o v e C o m p a ny o f Bu flalo
'

N ew Y o rk , u n d e rt a k e t o an a lyz e its m a rk e t ? This

co m p a ny m a n u f a ct u r e s st o v e s a n d r a n ge s in a v a ri e ty

o f styl e s a n d siz e s I t co ntr o ls n o p a t e nts o f e s p e c i a l

.

si gni fi ca n ce , b u t its p r o d u ct e nj o ys a w e ll est ablish ed -

re p u t a ti o n T h e co m p a ny s e lls th e b u lk o f its o u t p u t
.

in a t e rrit o ry within a r a d i u s O f 300 mi l e s o f B u ff al o .

151 . AM A Z O N R U B BE R C O MP AN Y —
M AR K E T A N A LY S I S
T he A m a z o n R u bb e r C o m p a ny m a n u f act u r e s ru b
b er f o o tw ear as w e ll a s o th e r p r o d u c ts This co m p a ny
.

wish e s to a n a lyz e th e p o t e nti a l d em a n d f or ru bb er

foo tw ear in th e Uni t e d St a t es I ts p ro d u ct is s o l d
.

e ntir e ly u n d e r its o w n br a n d s t o sh o e wh o l e s a l e rs a n d

a ls o d ir e c t t o m ed i um siz e a n d l a r ge r e t a il st o r e s
-
.

Wh at s u ggesti o ns sh ou l d b e giv e n t o t h e s a l es
m a n a ge r o f t h e A m a z o n R u bb e r C o m p a ny f or t h e
’
a n a lysis o f t h e C o m p a ny s m ark e t ?

1 52 . P E M A QU I D A UT O M O B I LE C O M P A N Y —
SE LL I N G
POI N TS
T he P em a q u i d A u t o m o bil e C o m p a ny w as e st a b
lis h ed in D e tr o it o v e r ten y ea rs ago T h e co m p an y
.
236 MARK E TIN G PR O BL E M S
h as b een s u ccessfu l fin a n ci a lly I t h as a n es p ec i ally
.

g o o d r e p u t a ti o n f o r t h e m a n u fac t u r e o f e n gin e s T he .

c o m p a ny h as r e ce ntly br o u ght o u t a n ew six cylin d e r -

au t o m o bil e .

T h e s e lli n g p ri c e o f this n ew c ar is T h e ca r
is m ad e in two m o d e ls I t is m a nu fact u re d in a n ew
.

p l a nt with m o d e rn,
u p t o d-
a t e e
-
q u i p m e nt I t h as .

nu m e ro u s fe at u res n o t o nly in th e a ttr active d esi gn

,

o f t h e b o d y b u t in t h e m o t o r co o lin g d e vi ce a n d a ls o

in o th e r m e ch a ni ca l p arts Sp eci a l a tt enti o n h as b ee n

.

giv e n t o m eans fo r s e cu rin g ea s e a n d com f o rt in ri d in g

a n d a ls o f or o bt a inin g e co n o m y in t h e u s e o f gas o lin e

a n d tir e s .

Be f o re t h is car was O ff er ed f or sa l e it w as p u t ,

thro u gh s e vere t e sts o n th e r oad s in s e v e r a l p a rts o f

th e c o u ntry . A s a r es u lt o f th e s e t ests a f ew m in o r ,

im p ro v em e nts in th e ca r w er e m a d e .

Wh a t gr o u p s o f s el lin g p o ints can th e P em aqu i d

A u t o m o bile C o m p a ny u s e in m arke tin g this car ?

1 53 . G O O DY E A R T I RE R U BBE R C O M PA N Y —
SE LL I N G
POI N TS
T he f o ll o win g n ews it em was p u blish e d M ar ch 4,
1 9 20 :

Los Ange l e s C alif M ar ch 4

,
.
, Three bu il d in g u nit s ar e
.
—

ri s ing r ap i d ly a n d will b e co m plet ed by J u ne 1 f o r t h e G o o d

year Tire R u b b er C o m pan y a n d t h e G o od year T ext il e
Mill s C o m pan y T h e e s tab li shm ent o f this plant e nt a ils a n
.

e x pe n d it u r e o f Alt ogether m en wil l b e

,

e m p l o ye d a n d tire s will b e t h e d aily o u tpu t A .

p ower p l a n t co ns i s ting o f thre e 6 00 hor s e p ower b o il ers o f th e

-

o il b u r n i n g ty p e is i n v o lve d
-
T h e p l a n t is n ear b o th t h e
.

Arizo n a an d I m p eri al V all ey cott o n fi el d s whi ch f u rnis h t he

,

kind of s taple whi ch is the bas i s O f the G oodyear tires .

 SAL E S MANA G E M E NT 237

Al ong with th e con s tr u cti o n o f t h e m anu fa ct u ring pla nt ,

t he G oo d yea r C om pany i s b eginn i n g a ho u s i n g d eve l o pm ent ,

ca ll e d t h e G oo d yea r G a r d ens T hi s co m m un ity cen tre will

.

co nt a in 8 00 h o u s e s E v ery wo rkm an h as a cha n ce t o o wn

.

his o wn ho m e o n a s m all i n iti al p a ym en t a n d m o nthly

,

inst all m ent s a cco rd i n g t o hi s a b ility to pay

,
.

Wh a t n ew s ellin g p o ints fo r th e p r o d u cts o f this

co m p a ny ar e s u ggest ed by this a nn ou n cem e nt ?

1 54 . E D G E W E AR SA FE T Y R A Z O R C O M P AN Y
SE LLI N C P O I N T
T h e E d gew ea r Sa f e ty R a z o r C o m p a ny d esir e s to
o bt a in a firm e r h o l d o n its m a rk e t , a n d f o r t h is p u rp o s e

co nsi d e rs it n e ce ss a ry t o s e e k a n e w s e llin g p o int f o r

its p r o d u c t This co m p a ny h a s b e e n in b u sin e ss fo r

.

a p e ri o d o f m o r e th a n t e n y ea rs . T h e E d gew ear r a z o r
is s o l d for N a ti o n a l d istrib u ti o n h as b ee n
s e cu r e d thr ou gh r et a il h a r d w ar e a n d r e t a il d ru g st o re s
.

T h e s al e s a lr ea d y a m ou nt t o a l a r ge v o l um e , b u t it is
d e sir ed t o in cr ea s e th em s u bst a nti a lly . Up t o th e
p r es e nt ti m e , n o p a rti cu l a r s e llin g p o int h as b e e n
feat u red ex cep t p ri ce , e as e o f u s e , a n d ge n e ra l cl a i m s
o f s u p e ri o rity .

How c a n th e E d gew ear Sa f e ty R a z o r C o m p any

p r o c e e d t o fin d a n e w s e llin g p o int ?
23 8 MARK E TIN G PR O BL E M S
155 . B AN N E R M AN U FA C T U R I N G C O M P A N Y— G R A D E or

P R O DU C T
T he B ann e r M a nu fa ct u ring C om pa ny h as b ee n
m a n u f a ct u rin g f u rnitu r e f o r tw e nty ye a rs I t is in co r
.

p o r a t ed with a cap it a l st o ck o f a u th o riz e d a n d

issu ed I ts tw o p l ants l o ca t e d in t h e M i dd l e W e st
.
, ,

em p l o y in a ll a b ou t 4 00 w o rk e rs T h e o u t p u t is s o l d
.

dir e ct t o f u rnit u r e r et a il ers by th e co m pa ny s o w n

’

s al es m e n .

Fo r s e v er a l y ea rs p a st this com p a ny h as b e e n m ak
in g th e cabin e ts f o r s e v e r a l t a lk in g m achin e co m p a n i es .

R ea lizin g th a t it h as faciliti e s f o r p u ttin g o u t m a chin es

m o r e ch eap ly th a n o th e r c om p a n i es it h as d e ci d e d t o
,

p l ace u p o n t h e m a rk e t u n d e r its o w n n am e a lin e o f

, ,

t a lkin g m achin e s o f its o w n m ak e I t h as s e cu r e d th e

.

a ge n c y ri ghts in A m eri ca f o r f or ei gn m a d e m o t o rs -
,

r ep r o du cers a n d t o n e a rm s
,
-
.

Sh ou l d th e co m p a ny p u t ou t a m a chin e o f b e tt er
gr ad e th a n co m p e tin g m a chin e s a t t h e s am e p ri ce o r ,

sh o u l d it pu t ou t th e s am e gr ad e o f m ach in e at a
l o w e r p ri ce ?

156 E X CE L S I O R
. WR I T I N G P AP E R C O M P AN Y— SA L E S
O R GAN I Z ATI ON

T h e E x ce lsi o r Writin g P ap er C o m p a ny d is co v e r e d
th at appare ntly a s u bst a nti a l n u m b e r o f its cu st o m e rs
w e r e n o t r e ceivin g p r o p e r a tt e nti o n an d a c h an ge in
,

th e a dm inistr a tiv e o r ga niz a ti o n h as b ee n p r op o s e d f or

c o nsi d e r a ti o n .

T h e E x ce lsi o r Writin g P ap e r C om p any m ark e ts its

p r o d u cts in p r a cti cally a ll p ar ts o f th e U n it e d St at e s .

I t s e lls to wh o l es a l ers a n d a ls o di r e ct t o n u m er o u s
r et ail ers in th e l a rge a n d m e d i u m si z e c iti e s an d t o w ns
-
.
 SAL E S M ANA G E M E NT 39

Ab ou t 4 0% o f th e s a l e s ar e m ad e to cu st o m e rs w h o
bu y in l ar ge q u a ntiti es T h e r em a in d e r o f t h e cu s
.

t om er s p ur ch as e s m a ll l o ts T h e cu st o m e rs b u yin g in
.

lar ge l o ts ar e r egu la r p a tr o ns o f thi s c om p a ny b u t it ,

n ow a p p ea rs th a t a m o n g t h e l ar ge n u m b e r o f m er

ch a nts w h o b u y s m a ll q u a ntiti e s th e r e is fr e q u e nt

ch a n ge . M a ny s m all cu st o m ers w h o h a v e b o u ght in

th e p ast ar e n o l o n ge r p u r ch asin g fr o m this co m p any .

This c o m p a ny h as s o u ght t o e m ph asiz e a p o li c y o f

fa ir treat m e nt to cu st o m e rs N e v er th e le ss it ap p ea rs
.
,

th a t in th e s al es d ep art m e nt a n d a ls o in t h e cr e d it a n d
shi pp in g d ep a rt m e nts m o r e p e rs o n al a tt e nti o n h as b ee n
g iv e n t o t h e l a r ge c u st o m e rs th a n t o t h e s m a ll c u st o m e rs .

Un d er th e p r es e nt o r ga ni z ati o n th e s a l es c r e d it , ,

cl aim s a n d gri e v a n ce s a n d shi pp in g d ep art m e nts a r e

,

fu n cti o n a liz e d T h e c l a im s a n d gri e va n ce s fo r a ll

.

cu st o m e rs , f o r e x a m p l e a r e h a n d l e d d ir e ctly a n d
,

e x cl u siv e ly in a sin gl e d ep a rt m e nt I t p r e vi o u sly h a d

.

b ee n p l a nn ed to ca rry this s p e ci a li z ati o n O f fu n cti o ns

fu rth e r a s th e o rgani z a ti o n d ev e l o p ed .

I n o r d er to s ecur e b e tt e r s ervi ce f or th e s m a ll cu s
to m er s it is n o w p r o p o s e d th a t th e s a l e s O ffi ce sh o u l d
,

b e r eo r ga niz ed with t errit o ri a l r a th e r th a n f u n c ti o n a l

s p e ci aliz ati o n A ccor d ing t o this n ew p l a n th e hirin g
.
,

an d co ntr o l o f a ll s a l es m e n f o r a ll t e rr it o ri e s will b e

ce ntr a liz e d u n d e r o n e h ea d A d v e rtisin g will a ls o b e

.

ce ntr a liz e d , a n d th e r e will b e a sin gl e c r e d it d ep a rt

m e nt . T h e co u ntry w o u l d b e d ivi d ed int o t e rrit o ri es ,

a n d o n e m a n in th e s a l e s d e p a rt m e nt w o u l d b e p l ace d

in ch ar ge o f each t e rrit o ry He w o u l d h a v e ch ar ge o f
.

th e r ou tin e s a l es w o rk cl a im s a n d gri e v a n ces a n d a ll

, ,

co rr e s p o n d en ce with cu st o m ers in his t er rit o r y In .

d ea lin g with m a tt e rs s u ch a s c r e d it h e w o u l d O f co ur s e
, , ,

b e gu i d e d by th e d ec isi o n o f th e c r ed it d ep ar t m e nt .

I s this p r opo s ed p l an p r acti cal ?

24 0 MARK E TIN G PR OBL E M S
1 57 C A L H O U N
. M AN U FA C T UR I N G C O M P AN Y
—
SE L E C T I O N
OF SA L E S M E N
Th e C a lh ou n M a nu f act u rin g C o m p any is e n gaged
in th e m anu f act u re an d s a l e o f in k , typ ewrit e r rib
b o ns , a n d ca rb o ns I ts p ro du cts ar e s o l d t o a few
.

wh o l es al ers , to l arge re t ailers , an d t o l arge in du stri al

an d com m er ci a l c o ns u m e rs T h e com p a ny m a int ains
.

a tr av e llin g s ales f o r ce O f ab o u t f o rty m en T h e m em .

b e rs o f th e s ales for ce a t th e p res ent tim e ar e hi gh

g r a d e s a l e sm e n N ev erth el e ss , th e com p any wi sh es
.

t o e x e r cis e gr e a t e r ca r e in th e fu t u r e in th e s e l e cti o n o f
r e cru its for th e sales for ce , in o r d er to im p r o v e its
qu ality .

T h e f o ll o win g instru cti o ns h a v e b een iss u ed r egar din g

th e s e l e cti o n o f s a l e s m e n

SE LE CT I O N L
O F S A E SM E N

Qu a lifica ti on s : C alho u n s al e sm en shou l d b e s el ect ed from

pr o s pe ct s w h o po ss e ss o r can b e tra in ed t o att ain t h e
,

qu alifi cati o ns d es crib ed

b elow .

1 H ea lth : Th ere sho u ld b e n o qu esti o n o f t h e app li

.

ca n t s h ea lth whi ch m ea n s n ot o nly co n d iti o n a t t h e ti m e

’
, ,

b u t a l so h is p ower o f r e s i st ance A s thi s i s t o b e d et ermi ned

.

b y a p hy s i ci an s e x am in ati o n n o f ur th er d es cri ption is

’
,

nee de d here .

2 A pp ea r a n ce a nd M an n er : T h e chi ef points to b e
.

not ed u nd er thi s h eading a r e

( ) p
1 e r s o n a l n ea t ne ss a s s h o wn by co n d iti o ns of na i ls

a n d t e eth b ear d a n d h a ir ; ,

(2) d re ss a s shown by co nditi on of shoes linen

, , ,

h at a n d s u it ;
( 3) t ast e a s sh own by styl e an d colors o f clothing ;
an ,i
(4 ) b earing a s shown by t h e d egree of co ur t e sy
, ,

p l ea s ing vo i ce s en s e o f h um o r e t c, ,
.

3 I nd u s tr y: Thi s i s a v ery im port an t q u alifi cati o n an d

.

m eans t h at t h e m an s ho u l d po ss e ss t h e tr ait O f workin g h ard

.

u n d e r a ll c o n d iti o n s pl e a s a n t o r d i s co u r a ging
,
It has b een .

ca ll e d s ti ck t o it iv en e s s per s i st en cy grit e t c
- -
, , ,
.

4 E du ca ti on : T h e equ ival ent o f a hi gh s ch oo l ed u cati o n

.

i s t h e l owes t e d u cati on al s t and ard we s ho u ld a ccept Thi s .

e d u cati o n m ay h ave b e e n o b t ai n ed a ct u ally at a hi gh s ch o o l ,

or in a n e v en ing s ch oo l o r by t h e f a cu lty O f l earnin g in o th er

,

ways Fu rtherm or e if o v er f o u r year s r em ove d from high

.
,

s cho o l gra d u ati on a ge ( 1 7 year s) we sho u l d che ck u p hi s

 SAL E S MANA G E M E NT 24 1

kn owl edge o f gen er al b u sin ess pr in ci pl es a n d cond iti ons that

h e sh o u l d h av e l ea r n ed if e m ploye d a n yw h er e pr evi o u s ly .

Thi s will i n d i cat e hi s a b i lity t o l e arn wh er ev e r h e i s pla ced ,

a n d his h a b it s O f att en ti o n t o t h e t a s k s a ss ign e d t o h im .

5 A ge : We sh o u l d s e le ct m en w h o s e a b i lity t o l ea r n
.

n e w way s o f d o in g a n d t o p u t t h e m i n t o p r a cti c e i s s t i ll

p r o n ou n c ed An o ther w ay o f p u tti n g it i s t o s ay we wan t

.

m en w h o can b e m o u l d e d e a s i ly t o fit o u r n e e d s a n d y et ,

m en wh o ar e m at u r e T h e u s u al a ge t h at ca r r i e s th e s e
.

q u aliti e s is f ro m 20 to 25 ye a r s It s h o u ld b e b o rne in .

m i n d h owev er t h at t h e s e q u a liti es fr eq u ent ly ar e to b e

, ,

f o u n d in m en O f O l d er y ear s .

6 P er son a li ty: Thi s i s t h e s u m t ot al o f t h e eff ect s o f all

.

qu ali ficati o ns It i s n o t s a fe to u s e t hi s as a n ind ivi d u a l

.

q u a lity b u t m ay b e u s e d t o d e s cri b e t h e m an a ft er t h e
,

d et ail e d a n alys i s h a s b e en m ad e .

I n tervi ew : T h e f o ll owi n g s u gge s ti on s f o r s izi n g u p a m an

a r e h e l p f u l in d e t er m i n i n g wh et h e r t h e ca n d i d at e h as t h e
q u alificati on s fo r a po s iti on a s a C alho u n Sa le s m an :
1 I n term i tten t I n ter vi ew : T h e ca n d i d at e s h o u l d b e
.

ob s erv e d u n d er a s m a ny co n d iti on s a s p o ss i b le Thi s m a y

.

b e d on e in s e ver a l way s in hi s p l ace o f e m p l oym e nt b y

,
—
,

t aki n g h im t o l u n ch b y h avi n g h im call a t t h e O ffi ce e t c

, ,
.

T h e p u r p o s e i s t o r e m o v e a n y a rtifi ci a l r e s t r ai n t a n d t h u s
j u d ge h im a s h e n at u r a lly a ct s a n d t a lk s o r in o t h er wor d s
,
“ ”
t o s t u d y t h e m a n wh il e h e i s O ff h is gu ar d A gai n b y
.

o b s ervin g h im a t i n t erv a ls t h er e i s a co rr e s p o n d in gly gr e at e r

,

cha n ce o f o b s e r vi n g t h e m a n u n d er v aryi n g co nd iti ons a n d

in vari o u s m o o d s .

2 M u lti p le I n te rvi ew: It h a s al s o b e en h elpf u l t o ha ve

.

a s eni o r s a le s m an i n t ervi ew a n d O b s er v e t h e pr o s p ect ive

s a les m an I n f a ct s el ecti o n s m a d e o n t h e b as i s o f m or e than
.

on e m a n s j u d g m en t u s u ally m e a n a s o u n d er d e ci s i o n
’
.

3 R ecor d of I n ter vi ews A ft e r e a ch i n t er v i ew o r o b s erva

. .

ti on o f t h e can d i d at e it will b e h el pf u l t o n o t e t he i m p r e ss i o n
,

o f t h e d i ff e r en t q u a liti e s h e h a s T h e a pp li ca ti o n b l a n k i s
.

t o b e u s e d t o j o t d o w n t h e v a r i o u s f a c t s l e a r n e d a n d i m pr e s
s i o n s gai n ed fro m ti m e t o ti m e T h e i m pre ss i on w i ll a ls o
.

vary fr o m o n e ti m e t o t he n ex t an d give yo u warn ing t o

c h e ck u p s u c h j u d gm en t s .

4 Fi n a l I n ter vi ew : T h e b lan k with a ll it s d etail s s ho u l d

.
, ,

b e fill e d o u t w h en yo u ha v e d eci d ed t h at t h e p r o s pe ctiv e

ca n d i d a t e i s wo rt hy o f s eri o u s c o n s i d er a t i o n f o r a po s i t i o n

with u s At t hat ti m e yo u sho u ld as ce r tai n a ll t h e f a ct s

. .

All d e ci s i on s o r q u alifi cati o n s w hi ch i n vo lv e j u d gm en t n o t ,

f a cts sh o u l d b e m a d e b efo r e t h e fi n a l i n t ervi ew

,
At thi s .

ti m e in a d d iti on t o ch e ck i n g u p t h e i t e m s o f age r es i s t an ce , ,

et c .
yo u sh o u l d fin d o u t if t h e m an i s a b le a n d is wi llin g t o
,

go wh er ever h e m ay b e ca ll e d u po n b y u s t o go .
24 2 MARK E TIN G PR OBL E M S
S ou r ce f S u pp ly: T h e fo ll owing s u ggesti ons
o ar e m ad e to
i n di cat e where s u ch m en as we need have b een f ou n d in
th e p a s t .

1 C a lho u n Bran ch H o u s es
. .

2 T h e C a lho u n Fa cto ry
. .

3 Cu s tom ers S tor es

. Thi s is a very goo d so u r ce in
.

whi ch to pra cti ce th e int erm itt ent int ervi ew m eth o d p ar ,

ticu lar ly to che ck u p t h e q u a lifi cati on s o f a pp e arance m an ,

n er ind u s try age a n d e d u cati o n

, , T h e cl erk in t h e c u s .

t om er s s t or e need neve r kn ow th a t yo u a r e s t u dying h im

’

“
a s a p o ss ib l e C alh o u n s a l e s m an a n d h en ce will b e O ff hi s
”
gu ar d a n d n at u ra l C l erk s in o u r cu s to m ers st or e s get
’
.

a k n owl e d ge of o u r lin es th a t is o f va l ue t o th em if th ey ,

s ell f or u s .

4 Hi gh S chools
. H ere is a ls o a go od pla ce to fin d t he
.

ri ght kind o f m at eria l It i s always po s sib le t o get in t o u ch

.

with th e Prin ci pal of t he s cho o l an d go o ver with him t he ,

li st O f you ng m en wh o will b e grad u at ed He o r his a ss i st .

a nt s know o f ea ch b o y s q u aliti e s a n d a m b iti on s an d u sua lly

’
,

can r eco m m end f o r yo u r ob s ervati o n s o n e o r t wo p o s sibiliti e s .

5 A dver ti si n g
. E x peri en ce h as pro ve n th a t thi s m eth od
.

o f getti n g a s u pply o f can d i d a t es is n o t effi ci ent It shou ld .

b e u s ed o nly a s a l a s t re s ort .

6 S m a ll ci ti es a n d lar ge town s
. D i s tri ct M anagers an d .

s a le s m en a s they tr ave l can k eep in m ind t h e n eed f or

C a lho u n Sa le s m en a n d b e o n t he l o oko u t f o r go o d p ro s pect s .

T h e s m alle r citi e s an d l arger t owns ar e as lik ely to have

them as the l arge citi es .

7 R ecords
. A li s t o f p o ssibl e cand i d at e s shou l d b e kept
.

at all tim e s T h e m e tho d of in t erm itt en t i n t ervi ews m ak es

.

it p o ss ib le t o t ake su ffici ent tim e t o siz e u p t h e m an s o that ,

wh enever there co m e s a call f o r m ore m en all t h e work p re ,

lim i n ary t o t h e fi n al in tervi ew will have b een d one with a ,

num ber of good pro s pe ct s in s ight for t he po siti on .

A v acan cy o n th e C a lh ou n s ales for ce h as o ccu rr ed ,

an d it is t o b e fill e d by o n e o f th e ca n did at e s wh o s e

app li ca ti o n r e co r d s with o mi ssi o n o f m in o r d e t ails ar e

, ,

giv e n o n th e f o llo win g p age s Whi ch ca n di d at e sh ou l d .

b e s el e ct e d ? T h e s u ccessfu l ca n d i d at e is t o b e assi gn ed
to t h e O hi o d istri c t ; l a t er it m ay b e n ecessar y t o
tr a nsfe r him e lse wh ere .
 APPLI C ATI O N R E CO R D
L
C A HO UN M AN UFACT UR I N G CO M PAN Y
Fu ll N a m e
So u rce o f
C M C Bra n c h Ho u s e
. . . R eco m m e n de d r
Ad v e t is e m e n t " r
Pe so nal
tr
.

C M C Fa c o y
. . .

”
t
by C u s o m e r O th e r
In tr e v ie w e d by
L o ca l Ad d ress A“ t T e lep ho ne
Ho m e Add res s 4”
t
Bir h p lace of Fa th e r a J
Age Z J—
o

Whe r e Bo r u
M i Bir th pla ce of Mo th e r g i
“( ho lly
e pe n d e n t s
M a rri e d Pa h a l l
t
He a l h (Appa re P hys ic ia n )

E DUC AT I ON
G ra d e Sc hoo l Hi gh Sc h oo l T r a d e Sc hoo l Bu s in ess Sc ho o l Co lle ge

AC T I VI T I E S

PR E V I O US E M P LO Y M E N T
C o m pa n y Per io d Jo b Sa la ry Rea so n s fo r Re fr
e

( K no w le d ge o

T e r r I to r y De s
w.“be Willi n g l cn l
’
Ye s L No
Q ua hfic u t i o n s ( Ap p li c a n t to be Ra t ed Al t er Ea c h I n t
e r v ie w )

Pe rs o n a l A pp
e a ra n c e A d p bl
a ta i i ty

T ac t an d Co ur tes y
Ale r t ness ;
Amb I t I o n
A n a l) l I cn l Po we r
Atte n ti o n to De t a i l
I n te res t an d E n l hu u m
'

Bo u n ces Sc n u:
 APPL I C ATI ON R E CO R D
C ALI I OUN M AN UFACT UR I N G CO M PAN Y
Fu ll N am e 0
C . M C Bra n c h Ho u s e
. . R ec o mm en d e d t
Ad v er ise m e n t Per so n al
O t he r
Da tes A” 5:
L oca l Ad d res s 4” j: T elephon e

Age L L Wh l Ba
e e u m t
Bir hpla ce of Mother
Who lly
epe n de n ts
Ma rried N O C h i ld ren Pa in l
p
.

Hea lth ( Appare nt) 4 M (Rat ing by Phys ic ian )

E DUC AT I O N
Gra de Sc hoo l High Scho ol T r
ad e Schoo l Bus iness Scho o l C o lle ge
Specia l C ourses

ACT I VI T I E S
t
Bus iness Or gan iza io ns (Spec i y if f
t
A hlet ics M
Ho bb ies M “

PR E VI O US E M PLO YM E N T
C ompany Per io d

en t ? Yes NO
Q ualifications ( Applica n t to be Ra t
ed A ft r E
e ac h

Pers onal Appearan ce Ada p ta b l ty

i i

T act and Co urt esy

Voice an d Langu age Ale rtn ess
Frank ness b
Am i ti on
An aly ti cal Power
Persi s ten ce Att e n ti o n to De tai l
I n teres t an d E n th usi as m
Breadth of View
 APPLI C ATI O N R E C O R D
L
C A HO UN M AN UFACT UR I N G C O M PA N Y
Fu ll N a m e

C M C Bra n c h Ho u se Re co m m end e d Ad v er t me n t Pe r s o n a l /
_
. . . i se

C M C Fac o r y
. . t t
hy C u s o m e r t
O he r
In tre v ie w ed by 7 Da t es

Lo ca l Ad d re s s T e le pho n e

Who lly
Ma rr ie d No C ld re
De pe n den t s
i Pa r t ia l '

Hea lth ( Ra t in g by
.

E D UC AT I O N
Gr ade
‘
gh oo l Hi gh Sc hoo l T rad e Sc hoo l Bu s iness Sc hoo l C o lle ge
Spec ia l C o u rses ( Spe c i y ) f 4’

AC T I V I T I E S
Bu s m ess Or ga n i
Soc ial O r
t t
A hle ics
H bb i
o es — L L

P R E V I O US E M P LO Y M E N T
C o m pa n y Pe r io d Jo b r
Sa la y Reaso n s fo r Re er f
t
Mo n hly Lea v m g e nces

SPE C I A L A BI L I T Y

wi ll be wi llin g t cn t
?

Q ua li fica t i o n s ( Ap pli ca nt to b e Ra t
e d Al t er E a ch I n tr e v ie w )

Pe rso n a l A pp e ara n ce A d p bl
a ta i i ty

T ac t an d Co u r tes y
V0 i ce an d La ng u ag e
Fr an k n c ss Am b i ti o n

An a ly ti c al Po w e r
A i i c n ii o o to De m !
I n k -ru t an d E n thusiasm
Bus i n es s Se nse
 APPLI C ATI O N R E C O R D
L
C A HO UN M AN UFACT UR I N G C O M PAN Y

Fu ll N a m e
r
S o u ce o f
C M C Br anc h Ho u se
. . . R ec o m m en de d Ad ve rtis e me n t Pe r so n al
M C Fac to y r t
1) C us o m e r / t
O he r ;
L QL
. .

In tr e v iewe d by — J a tes i ‘
l
'

den t s
Who lly

M
M a rr i e d t
epen
N o C i ld re Pa r ial
Health ( Apparen t) ( Ra ting by Phys ician) M
E DUC AT I ON
G r ad e Sch oo l High Sch us in es s Schoo l C ollege
Spec ial C ou r ses ( Spec i y) f
AC T I VI T I E S
So cia l Or gan iz a io n s t
t t
A hle ics
H bb i
o es

PR E VI O US E M PLOYM E N T
Com pan y Perio d Jo b Sa lary R ea so ns fo r R e er f
M o n hly t e a v in g Le nce s

( K nowle dge o f
Te rrit or y Des ir
Wi ll be Willin g to T a k e An y As s ign m e n ? t Ye s L NO _
Q ualifica t io n s t t
( App lica n to be Ra e d Al ter E a ch I n e v ie w) tr ~

Perso n al A ppe aran ce A d p bl

a ta i i ty

T ac t an d C our tes y
Aler t ness
Am bt i ion

A n a ly tic a l P o wer
At te n ti o n to De ta i l
I n te re s t a n d E n thu sms m
Bu s mess Se nse
 APPLI C ATI O N R E C O R D
C A LHO L N M AN UFACT UR I N G C O M PAN
’

Y
Fu ll N a me

C M C Br a nc h Ho u se
. . R eco m m e n d e d Ad v e r t i se me n t Pe r so na l /
C M C Fa c o r y
. . . t t
by C u s o m e r t r
O he
In t e r v ie w e d by Mg 2 Da t es i 4
'

m
Bi r
Age L L “here 80m . Bi rthp l ace o f Mo ther
Who lly 3
Ma r r i e d ; Pa r t i a l
__ _
”
Health ( App are n t) _L t
( Ra in g by P hys ic ia n) ‘
éflAd g

E DUC AT I ON
G r a de
'
gh oo l Hi gh Schoo l T r a d e Sc hoo l Bu s in es s Sc ho o l C o lle ge

AC T I V I T I E S
Bu s in ess Or ga n
Soc ia l Or
t t
A hle ics
H bb i
o es

P R E V I O US E M PLO Y M E N T
Co m pa n y r
Pe iod Jo b Sa la ry R ea so n s fo r R e e r f
t
Mo n hly Le a v m g e nces

Wi ll be Wi lli n g to T a ke A n y Ass i gn m e n t ?
Q ua li ficat i o n s ( Ap pli ca n t to be Ra te d A ft er E ac h I n t e r v ie w )

P e rso na l A pp
e a r an ce

A n a ly t i ca l Po wer
A t te n ti o n to De tai l
I n te re s t an d E n t hu si as m
Du n n ess Se n se
 APPLI CATI O N R E CO R D
L
C A HO UN M AN UFACT UR I N G CO M PAN Y
Full N a m e M
C M C Bra n c h Ho u se
. . . R ec o m m en de d Ad ver isem ent t Pe r so nal
C M C Fac o y
. . . tr by C us o m et r t r
O he
In tr e v ie we d by Da t es

L l Address
oca T e lep ho n e
Hom e Ad dr ess L
m
—
r
M
Bir th place of Fa the
Age fl Where Bo rn t
Bir hpla ce of Mother
d e n ts
Wholly
M ar r i e d
epen
Pa rt
i al

Hea lth ( Appare Phys ic ian )

E D UC AT I ON
G rade Sc hoo l Hi gh S 0 0 ! 6 T rade Schoo l Bus iness Schoo l Co llege
Spe c ial C ou rses (Spec i y) f 4
"

AC T I VI T I E S
Z Z2
l
t
Bu s in ess Or ga n iza io n s (Spec i y if M em f ber )

t t
A hle ics A
H bb i
o es

PR E V I OUS E M PLOYM E N T
C o m pa n y Per io d Job Sa lary Reasons for R e fr e

SPE C I AL ABI LI T Y

Will be Wi ll in g to T a k e An y Ass i gn men t ?

Q ua li fication s t
( Applica n to be Ra ed A t ft r E
e ach In tr e v iew)

A d p b li y
a ta i t
T act an d Co urt esy
Ale rt n ess
Am b i ti o n

An alyt i cal Po wer

Atte n ti o n to De ta il
I n teres t an d E u than as ia
Busw es s Sense
 APPLI C ATI O N R E C O R D
C ALHO UN M AN UFAC T UR I N G CO M PAN Y
Fu ll N a m e
So urce o f A
C M C Bra n c h Ho u se
. . . R eco m m e n d e d Ad ve r t i se t
men Pe r so n a l
C M C Fa c to ry
. . . t
by C u s o m e r t
O he r
In tr
e v ie wed by Da t
es — L IL L
L oca l Add ress i j

c pc n d e n t s
W ho lly
Ma r r i ed N o C h i ld r e Pa r t ia l
t
Hea l h ( Appare n ) t ( Ra t in g b Phys ic ia n )

E DUC AT I O N
G rade Sc hoo l H i gh Sc hoo l T r a d e Sc hoo l Bus m es s Sc hoo l C o lle ge
Spec ia l Co ur ses ( Spe e d y)

AC T I V I T I ES
Bu s m e ss

t t
A hle ics

P R EVI O US E M PLO Y M E N T
Com pan y Pe r io d Jo b Sa la ry Rea s o n s fo r R e er f
t
Mo n h ly Le a v m g e nces

S PE C I A L A BI L I T Y
( K n o w le d ge of Sp ec ia l Li nes , e tc

T erri t or y Des i re d
W ill be Wi lli n g to T a k e Any Ass ignm e nt ? Yes l NO
Q ua lificati o ns ( Appli ca n t to be Ra te d Af ter E ac h I nte r v ie w )

p
Perso n al A pe ar ance A d p bl
a ta i i ty

T act an d Co ur te sy
Vo i ce an d Lan gu age Al c r tn m
Am b i tio n

An aly ti ca l Po w er
At te n ti o n to De tai l
I n ter v
a l an d E n th un u m
Bau m Se nse
250 MARK E TIN G PR O BLE M S
158 . C A LI I O UN M AN U FA C T U R I N G C O M PA N Y— FO R M OF
A P P L I CAT I O N R E C O R D
Sh o u l d a n y m o d ifi ca ti o ns b e m ade in th e i n stru o
ti o ns a n d fo rm s u s e d by th e C alh o u n M anu fa ct u rin g
C o m p a ny as st a t e d in th e p r ece d in g p ro bl e m ? I t h as
b ee n s u gge st ed , f o r e xa m p l e , th a t thrift , r e li ability ,
a n d p e rh ap s o th e r q u a liti e s sh ou l d b e a d d e d t o th e list

O f q u a lifi ca ti o ns o n whi ch a pp li ca nts a r e to b e r a t e d .

1 59 . I R O QU O I S T Y PE W R I T E R C O M P A N Y —
SA LE S M AN UAL
T h e ge n e ra l s a l e s m a n age r o f th e Ir o q u o is Typ e
writ e r C om p any h as a p ro bl em O f d e ci d in g wh at is t o
.

b e in clu d e d in a n ew s a l e s m a nu a l
. .T h e co m p any
Op e r a t e s f o rty -
tw o br a n ch e s . T h e s al e s m a n ager O f
ea ch br an c h s e l e cts a n d d ir e cts t h e w o rk o f th e s a l e s

f o rce in his t errit o ry All co mm u ni ca ti o ns b e tw een

.

th e ce ntr al O ffi ce O f th e c o m p a ny a n d its s al esm en ar e

m ad e thr o u gh th e br a n c h m a n age rs .

I n o r d e r to s ecu r e m o r e eff e ctive trai n in g o f th e

s a l es m e n a n d great er u ni fo rmi ty in th e ir m e th o d s , a
system O f instru ctio n fo r th e e ntir e s ales for ce O f th e
co m p a ny is p l a nn e d . O n e O I t h e e ss e nti a l f ea t u r e s o f
thi s p l a n is a s a l e s m an u al, 3 co p y O f whi ch is to b e
.

fu rnish ed to eac h s a l es m a n .

Wh a t s o rt O f info rm a ti o n a n d instru cti o n sh ou l d b e

in clu d e d in this s al e s m a nu a l c o n cerning :
( 3 ) m e th o d s O f ( e) th e f act o ry ?
s a l e sm a nshi p ? (f ) th e p o li ci es o f th e
?
( b ) l o catin g p r o spe c ts ? c o m p a ny

( c) s al es a r gum ents ? ( g) an y o the r s u bj ects ?

( d ) th e p r o d u ct ?
 SALE S M ANA G E M E NT 25 1

1 60 HAWTH O R N G R O C E R Y C O M P AN Y—
. TR AI N I N G
SA L E S M E N
T he H a wth o rn G r o ce ry C o m p any o p e r a t e s a ch a in
o f 1 50 r e t a il gr o ce ry st o r e s a n d p l a ns t o o p e n m a ny

n ew br a n c h e s A t th e p r es e nt ti m e ab o u t 3 75 m en
.

a r e e m p l o y e d i n th e s e st o r e s .

A ce ntr a l e m p l o y m ent d epart m ent h as b ee n e st ab

lishe d to s u p e rvis e th e hirin g, tr a inin g, a n d d is ch ar g
in g o f em p l o y e es A tr a inin g s ch o o l f o r e m p l o y ee s is
.

t o b e o p e n ed E ach n ew e m p l o y ee will t ak e a c o u rse

.

in this s ch o o l , c o v er in g tw o t o thr e e w ee ks .

Wh a t s o rt O f instru cti o n is i t d esir abl e t o gi v e n ew

em p l o y ee s d u r in g this p eri o d ?

16 1 N. E P ON SE T QU O T A S FO R SA LE S M E N
SO A P CO M PAN Y —

T h e N ep o ns e t Soap C o m p a ny with a p l a nt l o c at e d
,

n ear Bo st o n m a nu fa ct u r e s s o ap fo r ge n e r a l h o u s eh o l d
,

u se . This p r o d u c t is wi d e ly a d v ertis e d an d s o l d d ir ect

to r e t a il ers .

Ho w sh o u l d th e s al e s m a n ager o f th e N ep o ns e t
So ap C o m p a ny u n d e rt ak e to wo rk o u t q u o t as for his
sa l e s m e n ? l

1 62 . A DI R O N D A C K A U T O M O B I LE C O M P AN Y —
QUOT AS
FO R SA L E S M E N
O n wh a t b a sis sh o u l d t h e A d ir o n d a ck A u t o m o bil e
C o m pa ny w o rk o u t q u o t as fo r i ts s a l e s m e n ? T h e
Me lv in T d, B us C o pe l
i ne s san S t a t is t i cs pp 1 8 2— 83
1 ; F H . .

l
.
.

o “
o r
D d ge , W ki n g O u t Q uo t s
a , r
P in e t r s
’
I n k , J u y 20 , 101 6 pp 98—1 08
, . .
252 MARK E TIN G PR O B L E M S
J

c o m pa ny has b een e n ga ged in th e m an u fa ctu r e o f

a u t om o bil e s fo r a p e ri o d o f twe lve y ea rs I ts p ro d u ct s .

in cl u de se v era l m o d els o f ca rs th a t s e ll a t p ri ce s ra n gin g

fro m to T h e co m p a ny o p er a t e s twe nty
fiv e bra n ch es l o ca t ed in th e l a r ger citi es o f th e Unit ed
St a t e s . T h e t e rrit o ry s e rv e d by e a ch br a n ch is d ivi d ed
int o s ecti o ns a n d o n e wh o l e sa l e s a l esm a n is p l aced in
c h a r ge o f ea ch s ecti o n Th e r e ar e ab ou t 1 50 wh o l es al e
.

s a l e sm e n A qu o t a s yst em for th es e s a l e sm en is
.

d esir ed .

1 6 3 K E N N E BE C C O M P AN Y
.
—
SALE S FO R C E E X P E N S E
M elvin T C opeland D irect or
.
, ,

B u reau Of R es ear ch ,

H ar var d Univers ity ,

C am b rid ge M as s ,
.

D ear Sir :
We have r e ceived yo ur l ett er O f J u ly l st an d we have
fill ed o u t t h e blan k whi ch yo u s ent u s an d wi sh t o advis e
yo u tha t we ar e very m u ch int er es t ed in r egar d t o t h e
m etho d s u s ed by t h e who le s ale gr o cers f or paying their
s a l e s m en .

O u r O ffi cer s th e Pr e s i d ent an d Tr ea s ur er call o n t he

, ,

city tr a d e an d p art o f the ir s al ary e a ch ye ar i s ch ar ged t o

s elling e x p en s e We have two s ale sm en who s e t errit ory i s
.

withi n a r ad i u s o f 25 m ile s We pay the s e s al es m e n 3 5 % o f

.

t h e gr o ss profits We have tw o s ale s m en who s e t errit ory i s

.

within a ra d iu s o f 50 t o 100 m ile s whom we pay 4 0% o f

t he gro s s pr ofit s We have t wo o th er s ale sm en w ho cover
.

p o int s whi ch d o n ot re ally b elo ng t o u s o n a cco unt o f t h e

d i s ta n ce an d sl ow d elivery o n t h e go o d s an d w e ar e payin g
thes e s al e sm en 50% of t he gro ss profit s We give o ur s al es .

m en a d r awing a cco u n t e a ch w e ek o f fro m $4 0 t o $ 6 5 an d

then give them t he p er cen t a ge O f t h e gro ss profit s as s t at ed
a b ove . O u r m eth o d O f fi gu ri n g t h e gr o ss pro fit i s t h e a ct u a l
c o s t o f t h e go o d s d e liv er e d in o u r s t o r e w it h a n a d diti on a l

ch ar ge o f 4 0 pe r h u n d r ed f or car t age We in clu de n o o ver

.
 SAL E S M ANA G E M E NT 253

head ex pe nse s in o u r co s t o f go o d s We c arry o u t the c o s t

.

o f e a ch o r d e r s hi pped o n t h e a bo ve b as is a n d fi gu r e t h e gr o ss

p r o fit s f r o m thi s b a s.i s O u r n e t s a l e s in 1 9 1 8 we r e

We hav e no ti c ed that o u r s ellin g e x pens e w as hi gh er tha n

t he a ver age wh ole s al e gr o cer s f r o m t h e s u m m a ri e s whi ch
’

yo u have s ent u s as w e no t e th a t yo u r ave r age f o r t h e y e ar

,

1 9 1 8 w as ab o u t We fin d t ha t o u r s elli n g e x pens e f o r
t he y e ar s 19 1 7 a n d 1 9 1 8 w as 3 1 We ar e O pe n t o a n y
s u ggesti ons in r egard t o t he pl a n o f payi n g s a l e s m e n a n d in
f ac t wo u ld li k e t o kn ow wh at t h e m e tho d s O f o th e r fir m s a r e
as o u r pl a n we wo r k e d o u t o u r s elve s a n d h av e n o t m u ch o f
an i d e a wh a t o th e r fir m s a r e d o i n g in r e ga r d t o p ayi n g th e ir
sa le s m en .

We a re n o t s ati sfi ed with o u r pre s e n t m e th o d a n d w e ,

sh ou l d like t o h ave s u gges ti o n s as t o h o w w e ca n l o cat e t he

cau s e f o r o u r h i gh s a le s fo r c e e x p ens e .

Awaiti n g yo ur re ply w e a r e
, ,

Y o u r s v er y t r u l y
,

T h e K e n n eb e c C o m pa ny.

1 64 . O G UN QU I T WH O LE S A L E G R O C E R Y C O M P AN Y
M E T H O D O F P A Y I N G SA L E S M E N
T he O gu nq u it Wh o l e s a l e G r o ce ry C o m p a ny e m
p l o ys tw e nty tw o tra v e lli n g sa l e s m e n Th ey a r e p a i d
-
.

a c o mm issi o n o f 25 to 4 0% o n t h e p ro fits T h e r e gu l a r
.

com m i ssi o n is p a i d t o ea c h s a l e s m a n o n m a il o r d e rs

a n d t e l ep h o n e o r d e rs r e ce iv e d fr o m his t e rrit o ry E ach

.

s al e sm a n is a ls o a llo w e d his re gu l a r c o mm i ssi o n o n

d r op shi p m e nt o r d e rs s ecu r ed by s p ec i a lty s a l e s m e n o f
-

m a nu f a ct u r er s in his t errit o ry fo r t h e a cc o u nt o f t h e
Ogu nqui t Wh o l es a l e G ro cery C o m p a ny .

I s th e O gu nq u it Wh o l e s a l e G r o ce ry C o m pa ny j u sti
fied in p a yin g th e r egu l a r co mm issi o n t o its s a l es m e n
254 MARK E TIN G PR OBL E M S
on m a il o rd e rs ,
1
t e l ep h o n e o r d e rs , an d d ro p -
shi p m en t
o r d e rs ?

1 65 . SE M I N O LE C O M P A N Y M E T H O D —
OF PAYI N G
SA LE S M E N
T he Sem in o l e C o m p a ny , m a nu fa ct u rin g t o il e t
a rti c l e s , em p l o ys sixty fiv e tr a v e llin g s a l e s m e n
-
I ts .

s a les f o r ce gr a du a lly is b e in g in cr ea s e d in n u m b e rs .

T h e co m p a ny s e lls t o r e t a il d ru g st o r es o v e r a wi de
“ ”
t errit o ry I t d e v o t es a tt e nti o n to d eal e r h e lp s , p ar
.

“ ”
ticu lar ly t o win d o w d is p la ys T h e s ale sm e n ar e .

“ ”
e xp e ct e d t o a ssist m e r ch a nt s in u sin g th e s e h elp s .

At th e p r ese nt ti m e ea ch s a l es m a n is p ai d a s al ary an d
is r eim b u rs ed f o r his a ct u a l e xp e ns e s .

Wh a t w ou l d this c om p a ny ga in by s u bstit u tin g a

co m m issi o n o n s a l e s o r o n p r o fits f o r t h e m e th o d o f

p a ym e nt by s a l a ry ? D o e s th e s a l a ry m e th o d h a v e
a n y s p e c i a l a d v a nt a ge in this ca s e ?

Wh a t is t o b e s a i d f o r an d a gainst th e p l a n o f
r e im bu rs in g a s a l es m a n f or his a c t u al e xp e ns es a s
’
c o m p a r ed t o th e p l a n u s e d by s o m e o f this c o m p a ny s

c o m p e tit o rs a cc o r d in g t o whi ch th e r e i m b u rs em e nt f o r

e x p e ns e s is c o v e r e d by th e co m m issi o n o r by a l u m p

su m ym e nt ?
pa
W o u l d it b e p r a cti ca l fo r this co m p a ny to p a y a
s m a ll b o nu s t o a s al esm a n fo r ea ch n ew a cco u nt s e cu r e d ?

”
1
. . u
A H D e t e , Sh all S alesm en G et C r e di t for
“
M ai l O r d e rs ?
’
u
P ri n te rs I n k , J n e 26 , 1 9 1 9 , pp 1 7- 19 . .
 SAL E S MANA G E M E NT 255

1 66 . N O R FO LK H O S I E R Y C O M P A N Y —
G UA R AN T E E
T h e N o rf o lk H o si ery C o m p a ny is t o a dd silk h o si e r y
to th e o th e r c l a ss e s o f go o d s th a t it n o w m a n u f a ct u r e s .

’
I t is t o p r o d u ce b o th m e n s a n d w o m e n s silk h o si ery
’
.

T h e q u ality is t o b e a s go o d as th a t o f a n y co m p e tit o r .

T h e h o si e ry is t o b e wi d e ly a d v ertis ed u n d er t h e
’
m a n u fact ur e r s tra d e- m a rk .

Sh o u l d a gu a ra nt ee o f th e p ro d u ct b e giv e n t o cu s
t o m er s ? I f s o , in wh a t fo rm ? I f th e p r o d u ct is gu ar
a nt eed , sh ou l d r ep l a cem e nts b e m a d e by d ea l e rs o r

d ir e ctly by th e N o rf o lk H o si ery C o m p a ny ?
O n e m a n u fa ct u re r o f a si m il a r p r o d u ct st a t e s m e r e ly
“ ”
th a t th e p r o d u ce is gu ara nt eed with o u t fu rth e r q u ali
ficat io n o r e x p l a n a ti o n . A n o th e r h o si ery co m pa ny h as
t h e f o ll o win g fo rm O f gu a r a nt e e o n th e ti ck e t a tt a ch e d
“
t o e a ch p a ir O f h o s e : I f this p a ir d o e s n o t w ea r s a tis
fa cto r ily , p l ea s e r e t u rn with this ti ck e t t o o u r f a ct o ry ,
”
a n d w e will s e n d a n e w p a ir in e x ch a n ge .

A m a n u fa ct u r e r o f silk gl o v e s h as u s ed th e fo ll o w
in g f o r m o f gu a ra nt ee , st a t ed o n th e ti ck e t a tt ach ed to
“
e a ch p a ir o f gl o v e s : Wa rr a nt e d n o t to cu t thr ou gh o r
”
w ea r o u t a t th e fin ge r e n d s with r e as o n abl e w ea r .

O n t h e insi d e co v e r o f th e c art o n in whi ch th e go o d s

a r e shi pp e d t o r e t a il e rs , it is ex p l a in e d th a t th e gu a r

a nt e e is int e n d e d t o c o v e r ti p s o f gl o v e s o nly whil e t h e

re st o f th e gl o v e is in go o d co n d iti o n I t is n o t int e n d e d
.

to c o v e r w o rn o u t gl o v es , w a sh e d gl o v e s , gl o v e s cu t by
-

rin gs , stra in e d gl o ve s , a n d s o o n T h e e x ch a n ge s a r e
.

m ad e by th e d ea l e r , a n d th e cu st o m er m u st s u rr e n d e r
th e gu a r ant e e ti ck e ts o f b o th th e p a ir r e t u rn e d a n d th e
n ew p a ir r e ce iv e d in e x ch a n ge .

A n o th e r gl o v e m anu fact u r e r st a t e s his gu ar ant ee as

“
fo ll ows : Any gl o v e s b earin g o u r n am e ar e w arra nt ed
n o t t o t ea r in tryin g o n G l o v e s th a t sh o w d e fects in
.

m at eria l o r w o rk m a nshi p wh e n fi rst tri ed o n will b e

c r ed it e d o r e x ch a n ged . We ca nn o t a cce p t fo r e x ch an ge
th e r e t u rn o f w o rn o r s o il e d gl o v e s b u t will b e p l e as e d
,
”
t o r ep air s am e fr ee o f c h a r ge .
256 MARK E TIN G PR OBL E M S
A t oo th bru sh m a n u fact ur e r u s es th e fo ll owin g
gu ar a nt ee : This br u sh i s m ade o f the b est m a te ria l .

”
I f d e fective , we will r ep l a ce it .

1 67 . A LLE GH E N Y WH O LE SA LE G R O C E R Y C O M PA N Y
R E T UR N G O O D S
T he A ll egh e ny Wh o l es a l e G r o cery C o m p any h as a n
a nn u a l v o l u m e o f s a l e s o f T h e m e r ch an
d is e r et u rn ed by cu st o m ers a v e rages ab ou t
a y ea r .

Wh a t p o li cy sh ou l d th e co m pany adop t for d ea lin g

with r e tur ns ?
T h e co n di ti o ns in th e wh o l es al e gr o cery tr ad e gen
e r ally h av e b e en s umm ariz e d a s fo llo ws by o n e
wh o le s al e gr o ce r :1

Ther e ar e t wo clas ses o f go ods ret urned a n d m any kinds

o f a ll o wa nce s d em a n d ed Fir s t r ef errin g t o t h e go od s
.
,

retu rned th ere is t h e m er ch ant abl e clas s T he q u e s ti o n

,
.

“
in stan tly pr es ents it s elf Why ar e m er chant ab l e go od s
,
”
ret u rn ed? There ar e a n um ber o f a n swer s t o thi s q u e s ti o n .

T he q u ality m ay n ot b e right o r t h e shi pm ent m ay b e u n r e a

s on ably d e l ay e d ; t h e cu s t o m e r m ay b e a ca r e l e ss b u ye r a n d ,

o r d e r m o r e th a n his tra d e r e qu ir e s In thi s ins tan ce t he

.
,

s al e sm en a r e a s a r u l e r e s po ns ib l e a t lea s t in a l arge m ea s ure

, .

There m ay h ave b een a s u b s tit u tio n by t h e j o bb e r ; s end in g

“ ”
s om ethin g j u s t as go o d a s t h e bran d o rd ere d ; t h e s al e s m an
m ay ha ve b ee n o verz ea lo u s an d m i ght have m i s r epr es ent ed
t h e go od s .

It m u s t b e a dm itt ed that a l ar ge q u antity o f m er chant

a b l e go o d s a r e r e t u rn ed with f r ei ght a n d o the r char ge s f o l

O B M cG las so n : R e t ur n ed Goods an d Allo wa n ces N ati on a l

1 “
. . ,

Who les a le Gr ocers B u lleti n M ar ch 5 1 9 1 7 An o t he r st t em e n t r egar d

’
, , . a

i n g t h e r e t u r n e d goo d s p r o b le m i s giv e n in t he N ationa l Wholes a le

Gr ocer s B u lleti n N o v e m ber
’
,
 SAL E S MANA GE M E NT 257

lowin g t o b e pa id by t h e j o bb er showin g a d irect l os s , , as i de

from t h e los s o f profit a n d d e te ri o rati on .

T he s e co nd cla s s o f go o d s ar e th o s e whi ch in s o m e
in s t ance s were s o ld a n d s hi pped year s in o t her s m o n th s , ,

a go . Witho u t a n y n o ti ce o r co m pla i n t fro m t he c u s to m er

t h e j o bb e r i s s hi p p ed a co n s i gn m e n t o f r e t u r n ed go o d s T he .

go o d s a r e O ld s p o il e d s t a l e s ho pwor n a n d o ft e n wo rthl e ss
, , ,
.

O n e lo t r e t u r n ed i s wo rth 50% o f t h e o ri gi n a l co s t ; a n o th e r
an d a no t he r a b s ol u t ely o f n o v a l ue n o t w o rth f r ei ght ,

ch ar ge s .

T h e d ay t h e go od s a r e r et u rne d o r m or e O ft e n s om e d ays
,

l at er t he c u s t om er writ e s t o t he j o bb e r r eq u e s ting that cr ed it

,

b e pl aced t o hi s a c co u n t f o r t h e go o d s r e t u r n ed with p er ,

haps n o f u rthe r e x planati o n o r t he cu s to m er freq u en tly

,

shi p s t h e ret u rned goo d s witho u t a n y l ett er o r co m m en t

what ever In this ca s e h e a s a r u l e e x pe ct s t o m a k e a
.
, , ,

paym ent o f hi s acc o u n t a n d ret u rn ed go o d s are ch arged b y

,

him b a ck t o t h e j o b b e r a t t h e o ri gina l i n v o i ce va l u e with ,

check t o b a l a n ce o r t o b a l a n c e hi s a c co u n t t o a c e rt ain d at e
,
.

T h e c u s to m e r in th e s e ca s e s a ss u m e s t h e a u t h ority t o
ch ar ge b a ck t h e f u ll invo i ce v a l u e f o r wo rthl e ss goo d s o r fo r

goo d s w o rth o nl y a s m a ll per cen t a ge o f t h e o ri gi na l v al u e ,

“ ”
a n d i n v a ri ab ly i n s i s t s t h e go o d s r e t u r n e d a r e OK o r in
t h e s a m e co n diti o n as when s hi pp ed t o h im an d a ft er writi n g ,

t h e c u s t o m e r r ep ea t ed ly wit h a vi ew t o a d j u s ti n g s u ch a
c l ai m with a r eas o n ab l e a ll o w a n ce w h a t is fa ir a n d ri ght , ,

hi s r eply bri n gs a n u nd er cu rrent o f f ee li n g s u gge sti n g that hi s

b u sin es s will b e tr an sferr ed t o an o t h er h o u s e u n l e ss h e
rece ived f u ll cr edit f or go o d s r et u rned a n d fr eq u ently hi s ,

l ett er s a r e plain a n d m ake thi s s t at em ent in s o m an y wo rd s .

Sal e s m en in s u ch ca s es u s u ally t ak e t h e p art o f t h e cu s

t om er Therefore und er e x i s ti n g co n d iti o n s t he j ob b er i s
.
,

hel pl e ss a n d a l arge per c ent o f u nj u s t clai m s m ad e b y

cu s t o m er s fo r wo rthl e ss go o d s r e t u rn e d a r e a ll o w ed by
j o bb er s a s a m atter O f po li cy a n d pas s ed t o the cr ed it o f
, ,

th e cu stom er .
258 MARK E TIN G PR O BLE M S
1 68 . K AT A H D I N C O T T O N M LL S I -
C AN C E LLAT I O N S AN D

R E T UR N S
T he fo ll o win g s al e s co ntract is u s ed by th e K a t ah d in
C o tt o n M ills T h e c o m p a ny o p er a t e s a m ill o f
.

sp in d l es fo r th e m a nu fact u r e o f fin e gr e y go o d s T h e .

ou t p u t is s o l d chi e fly t o ga rm e nt m an u fa ct u r ers .

wh o l es al e rs a n d co nv e rt ers , .

C O N T R A CT
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

yard s (vari ati o n n ot t o e x ceed 2% all owed )

p i e ces o f yard s ea ch
b a les o f yard s e a ch
(Allowab l e vari ati on in l en gth of pi ece s if sp eci a l ) .

I n a d d iti on b u yer t o t ak e Se co nd s
, .

a n d s ell er t o d eliver if m ad e : Tailings at stat ed

co ntr a ct p ri ce if co n
tra ct is n ot r en ewed .

TI M E OF D E LI V E R Y
f ro m d at e h er eo f
d u ri n g e ach w eek , comm e ncing
week ending .

d u rin g e a ch m on th , b egi n ning in

t h e m on th o f
WI DT H IN I N CHE S
C O UN T P E R I N CH ,
War p Filling .

WE I G HT :
N O Shi pm ent t o av er a ge light er
H
EPSU
N
R I
N O b a l e t o b e o v er 1 % tha n T D
N o pi ece t o b e o v e r 3 % h eavi er
PR I C E . C E N TS PE R YAR D
T E R M S O F P A YM E N T :
N et d ays f rom d at e o f d eli v ery
N et d ays fr om d a t e o f d elivery
f or p aym en t within
f r om d at e o f d elivery .

P LA CE OF D E LI VE R Y :
F O B t o carri er at
. . .

f r ei ght a ll owa n ce .

SP E C I A L C O N D I T I O N S :
SH I P P I N G I N S T R U C T I O N S ;
I f t h e pr o d u cti o n o f t h e s ell er sh all b e cu rt ail ed d u r i ng
t h e ti m e ab o v e n am e d , by s tr ik es , l o ck o u t s , o r u navo i d able
c a s u a lti e s , t h e d e liv eri e s s ha ll b e m ad e a n d a cce pt e d I n

pro po rti on t o t h e pro d u cti on .

 SAL E S MANA G E M E NT 259

T h e pr ovi s i o ns o f P aragr aphs I , I I , an d I I I , a n d t h e

all owab l e vari ati ons f r om s p e cifi ca ti on s as a d o pt ed b y T h e
Am eri can C o tt on M an u fa ct u r er s A ss o ci ati o n a n d T he
’

N ati on al A s s o ci ati o n O f C ott on M an u fa ct u r er s , a ll as print ed

o n t h e b a ck h er e o f , a r e a c c e pt e d a n d a gr e e d t o a s a p ar t o f
this co n tr a ct , u n l e ss o th erwi s e s t at e d h erei n .

Th i s s al e n o t e i s t h e e n tire c o n tr a ct b e tween t he b u yer

a n d s ell er , a n d a n y a lt e r ati o n in o r c ha n ge s f r o m t h e pri n t ed
f o rm o f thi s co n tr a ct m u s t a pp ear o n it in writin g .

A C CE P T E D :
B ost on ,
.

Fo r m 54 .

P ar agr aph I — P A S S I N G O F T I T LE O N D E LI V E RY
. Un less o ther .

wis e s pe cified , t he t itle t o go o d s s o ld p ass es to t he b u yer ( su bj ect

to th e r igh t o f s t o pp age i n lr an si l u )
a Upo n d e liv ery F O B t o ca rr ie r , con s ign ed to b u yer , an d
. . . .

th ereaf ter goo d s a r e a t b u ye r s risk

’
.

b Up o n a rr iv al o f go o d s a t d es tin at io n a n d d elivery to
.

b u yer o f b ill O f la d in g o r o f go o d s , in t he case O f good s

t o b e d eliv er e d F O B e ls e w h ere t h an to carr ier
. . . .

0
. Upo n d elive r y o f in d o r se d b ill O f lad in g o r o f goods , in
th e cas e O f go o d s c o n s ign e d to s eller s or d er
’
.

d Upon t h e s e parati o n o f t h e go od s a n d h old in g s u bj e ct to

.

bu yer s o r d er ( the in v o ice t o f ollow by d ue cou rse o f

’

m ail) , in th e ca se o f go o d s to be held o r i f b u yer fails

t o giv e s h ippin g i n s tr u ct ion s .

P ara g p
r a h I I —
ST O R A GE A N D I N S U R A N C E
. Goo d s i n v oi ced .

an d h eld s u b j e ct t o b u yer s o r d e r s s h all b e a t b u ye r s r is k , b u t

’ ’

cover e d b y fir e in s u r an ce e ffe ct ed b y s elle r s in r e pu t a ble com pan ies .

P aragr a p h I I I R E J E C T I O N S A N D C LA I M S
.
—
T he b u ye r ca n n o t .

r ej e ct th e go o d s f o r d elay in d eliv e ry u n less h e n o t ifie s t h e s e lle r

with in fiv e b u s in ess d ays f ro m r e ce ip t o f b ill o f la din g, o r o f in v oice
if go o d s a r e t o b e h eld Wh en c o n t ract calls f o r d e li v ery in in s tal
.

m e n ts , t h e b u yer c a n n o t c a n c el th e co n tr a ct fo r an y d e fau lt in
an y o n e o r m o r e in s tal m e n t s n o t a m ou n tin g t o a s u b s tan ti al b re ach
o f co n tra ct , b u t m ay ca n cel o r r eplace a t se lle r s e xpe nse a n y
’

d eliv ery t ha t is d el aye d .

Bu ye r c a n n o t rej e ct go o d s f o r d e fe cts in qu alit y o r o ther lik e

d efau lt s ( a ) if he cu t s o r co n v er ts t h em , n o r ( b ) u n le ss he n o t ifie s
s eller with in n in ety d ays f r o m r e ceipt b y him o r a t fin ish in g wo rk s
O f go od s n o t h eld , o r w it hin n in e ty d a ys a f te r d ate o f i n v o ice if

goo d s ar e i nvoi ce d a n d h eld ; n o r ( c) u n less s u ch d e fe cts am ou n t to

a s u b s tan tia l b r e ach o f co n tr act .

Lo ss o f r igh t t o r ej e c t d o e s n o t d e pr iv e the b u ye r o f his righ t

t o claim d am a ge s , if an y ; b u t n o r e co v e r y s h all b e h ad o n a n y clai m
n o t m ad e wi t h in o n e ye a r f ro m re ceipt o f goo ds o r f r om d ate o f
invoice if go od s a r e held .

A LLO W A B LEVAR I AT I O N S F R O M C O N T R AC T S P E C I FI C AT I O N S

WI DT H T h e wid th s h a ll n o t
. v a r y a n yw h e re b y m o re t h a n
V3 o f an in ch b elo w th e s tipu la te d w id th n or m o re t h a n o f an
26 0 MARK E TIN G PR O BL E M S
in ch ab ove . T h e wid th sh all n o t b e u niform ly less th an th e s tipu
la te d w d th , b u t m u s t , i n a m aj o r ity o f places in e a ch p ie ce be
.

e qu al t o , o r gr e a t e r t h a n , t h e s t i u late d wid th G oo d s s h al l be
l
.

m e a su r ed a t r igh t a n gle s t o t h e s e v ages whe n la id O pe n o n a fla t

h o r iz o n tal s u rf a ce a n d s m oo the d o u t b y h an d , b u t n o t s tr et ched .

WAR P C OUN T E xcept within fo u r i n ches o f e ach se lv age

.

(wh ere e x clu s iv e o f the selvage th e cou n t m u st approxi m ate

,

t h at s tipu la te d ) th e n u m b er o f w a r p th r ead s per in ch s h all

,

n ot va r y an yw h er e b y m o re t h a n o n e t hr ead pe r in ch be low
t he s tipu lat ed c o u n t , n or by m or e t h an t w o th re ad s pe r in ch
ab ove . T h e n u m b e r o f t h r e ad s i n e ach p ie c e m u s t e qu al the
s tipulate d cou n t m u ltiplied b y the s tipu late d wid th plu s the e xtra
th reads u sed in the s elv age .

FI LLI N G C O U N T T h e n u m b er o f th r e ad s in th e fil lin g, or weft,

.

sh all n ot var y an ywher e b y m ore th an thr ee thr ead s per in ch below

th e s tipu la t ed co u n t , n or b y m o r e th an f ou r ab ove I n th e case o f .

s ateen s , wh en t he c ou n t o f fillin g e xcee ds the coun t o f the warp ,

t h e all owa n ce f or var iation ab ove s pe cified s h all be in cre ased b y
th e s am e pe r cen tage th at t he filli n g co u n t e xceed s t h at o f th e w a
c ou n t. I n an y ca se in clu d i n g s ate en s , t h e fil lin g coun t pe r in c
sh all n o t ru n b el o w the s tipu late d cou n t thr ou gh ou t the piece , b u t
m u s t , in a m aj ority o f places in each pi ece , e qu al o r b e m or e than
th e stipu late d cou n t .

WE I GHT . I n ca s e o f co n tro versy r egar din g th e w eigh t o f goo ds ,

d e cis ion sh all b e b a s ed

goo d s whi ch h av e b een e xpo sed f or
on
t we n ty f ou r h ou r s t o n orm a l a t m os ph er ic co n ditio n s appr o xima tin g
-

a te m pera tu r e o f 7 0 d egr ees F a n d a h u m id ity o f 7 0 pe r cen t

. .

I n th e p ast wh e n e v er a su d de n slu m p in b u sin ess

,

c o n d iti o ns ha s o ccu r r e d t h e K a t a h di n C o tt o n M i lls

, ,

lik e m o st c o tt o n m a n u f a ct u r e rs a n d a ls o lik e m an u fac

t ur er s in n um e r ou s o th e r i n d u stri e s h a v e s u ff er ed fr o m ,

l ar ge s ca l e can ce ll ati o ns o f o r d e rs a n d from th e r e t ur n

o f m e r ch a n d is e by cu st o m e rs H er et o f o r e wh e n cas e s
.

a risin g u n d e r s u ch c o n d iti o n s h a v e b ee n t a k e n int o

t h e c o u rts t h e d e f e n d a nts h a v e u s u a lly b ee n a bl e t o

,

S h o w s o m e d e f e cts i n t h e go o d s t o s e rv e a s a l e ga l

e x cu s e f o r r e j ecti o n A p i ece o f c o tt o n c l o th is n e v e r
.

f u lly p erfe ct T h e p o ssibility O f im p erfe cti o ns fu r

.
,

th er m o r e is int e nsifi e d d ur in g th e p e ri o d o f fe v e rish

,

b u sin e ss co n d iti o ns th at u su ally p r eced e s a slu m p in

t h e m a rk e t A t s u ch tim e s l a b o r is n ot e asily s e cur e d
.
,

an d fr e qu ently th e m an agem e nt a s a m a tt e r o f ,

e x p e d i e n cy a v o i d s th e O bs e rv a n ce o f as ri go r ou s ru l e s
,

o f insp e cti o n a s in o r d in a ry t im e s .

D o es this c o ntr a ct p r o vid e a d equ a t e ins u ra n ce to

th e K a t a h d in C o tt o n M ills a ga in st a l ar ge v o l um e of
 SAL E S MANA GE M E NT 26 1

ca n cella ti o ns a n d r e t u rn ed goo d s in th e e v ent of a

su dd en slum p in th e m a rk et in th e f u t ur e ? 1

o
Acc r di n g to news pa per r eports t he N at i n al As s ciat i n o f
1
o o o
Shee t a n d fi n Plate M a n uf ac t ur ers , c m pr is i n g a b t 25 % o f t h e o ou
u
m a n uf ac t r ers O f s hee t a n d t i n plat e g o ds i n t he c n tr y , a n n nced o ou ou
o
a ne w c n tr ac t i n Se pt e m b e r , 1 9 16 , d es ig n ed t e li m i na t e c an c ell at i n o o
Of o o
r d ers T hi s c n tr ac t b n d t he b ye rs to t ak e all r d ers placed
. ou u o
or pay a pe nal ty of 1 0 % of t he c n tr ac t pr ic e o .

I n t he cl o thi n g tr ade an ot h e r plan o f d e ali n g wit h can cella t i ns o

was ad o pt ed i n A pri l , 1 9 1 9 . T his pla n is d esc ribe d as f ll ws i n t h e o o
p r ess r e po rts :
T he es t ab lis m e n t o f t he M t al Ad j us t m e n t B r ea u o f t h e
“
u u u
o
C l t h an d G ar m e n t d es t hr gh t he ac t ivi t y o f t h e Am e ri c anou
Ass ciat i n o f W le n a n d W rst e d M a n f ac t r e rs , wi ll r e m ve f r m
o o oo o u u o o
t he w oo u u
l m an fac t r in g i n d s tr y a n ab s e t h a t h as pe rs ist ed fo ru u
m an y ye ars T h e u n j ust r e j ect i n a n d r e t r n O f m e r ch a n di se b y cer
. o u
u
t ai n clas ses o f b yers h as be e n a n e vi l o f c ns id er ab le r o port io ns o
l
.

o
I t h ad its rigi n part ly i n t h e a b se n c e o f w h at mi gh t be cal ed a st a n d
ar d fo r d e liv e ry a n d part ly i n an in s uffi cie n t r e gar d f or t he m e ani ng
o f a c n tr a ct o .

“
o
I n a ppr achi n g t h e pr b le m o f c rr e ct in g t his pr act ic e , t heo o
o o o
Am er ican Ass ci a t i n r e c gni z ed t h a t , t be efi e ct iv e , m a chi n e r y fo r o '

ou
d e alin g wi t h it s h ld b e m t ally m ai n t ai n ed u u
Af te r m c h c ns ult a . u o
o u u
t i n a n d car e f l st d y, t h e pla n of t he M t al A d j s t m e n t B r ea u u u u u
was c n ceiv e d o o
T hi s r ga n iz at i n wi ll b e c n tr lled b
. o
a bo ar d o f o o
o o o
g v e r n rs a pp i n t e d b y t h e Am e r ica n Ass c iat i n a n t h e v ar i s o o ou
o o u
r gani z at i ns o f p r ch as e rs o f cl t h Th e plan h as be e n ac ce ted o .

o o
b y t h e N a t i n al Ass cia t i n o f C l t hi e rs , w hi ch h as a p po i n t o its o
u
r e pr esen t at iv es I t is n ow n der c ns id er at i n b y t he cl ak a n d s ui t
. o o o
o
tr ade a n d t he j bb in g tr ad es T he m e th od s n der whi ch t he n e w . u
o
or ga niz a t i n wi ll O pe r at e Wi ll b e b r ie fly , as f ll ws : o o
“
As t h e n am e im plies , t h e B r e a is for t he m t al ad v a n t age O f u u u u
o
t he v ar i us b r a n ches o f t he tr ad e a n d pr v id es t h a t m e r c h a n dis e o
u o
s h all b e j d ged s le ly o n its m e r i ts I t W i ll a t n ce pr e v e n t t he un w ar . o
u
r an t ab le r e t r n o f m er ch a n di se b y s
e rs a n d t he i m pos it i n Up n u o o
o u
c us t m e rs b y m a n f a c t u r e rs o f c l t h o f i nf e r i r q a lit y o o u .

“
o o o
Th e b ar d o f g v e r n rs will a p in t a d i r e ct r , w h o s h all h av e o o
o
s uch te ch ni cal tr ai ni n g, b t h fr m t e po i n t o f Vie w o f t he m an u fac o
o
t ur ers o f c l t h a n d t h e b u er , as Wi ll e na b le hi m t p ass i m p ar t iall y o
u po n m e r ch a n dise r e fe rr e t t he M t ual Ad us t m e n t B r e a fo ro u u u
de cis i n o o
His d e cis i n s h all be m a d e q i c kly an wi ll be fi n al, s b j e c t
. u u
o nl y t o
a pe al t o
t h e b ar d o f g v e r n rs o o o .

“
Mi w ill r e t ai n t h e ir ad us t e rs as a t pr e se n t , a n d b u ers t he ir
'

s o n gers , a n d t h e o
r di n ar y d i er e nces o f’ pi n i n will be a j s te d i n o o du
puu
t e s al we b ut w h e n e v e r t h e m ill s a d j s t e r a n d t he b ye r s u u ’

a e n t , ge n e r
g ly t h e s p n ge r , ar e u n ab le t o
agr ee , t he m er ch an dise o
uo
Wi ll a t m a t ic ally b e r e fe rr ed t t he Bu r e a o u .

“
o o o
I t is pr p sed t i ns e rt i n t he c py o f r d e r a c la s e p r vidi n g o o u o
for fin al a d j us t m e n t b y t he b ur e a u O f d i s p t es as t q ali t y r c o n u o u o
262 MARK E TIN G PR OB L E M S
dit io n o f m e r ch a n d is e d e liv e r e d T he m ill , as t he b u ye r , wis hi n t o .

b e fai r , W i ll h av e n o h es it a n cy i n s ub m itt i n g t o t h e b ur e a u be .

c u st o m e r n o t willi n g wi ll b e f o r ce d t o t h e pla n , be ca u s e o f his i nab ili t y

t o b u m e r ch a n d ise e xc e p t s u b j e c t t o t his c o n di t io n .

h e n e w b u r e a u is e xpe ct e d t o d o t hr e e t hi n gs fo r t h e di ff e r e n t
b r a nc h e s o f t he i n d u stry Fo r t he c lo t h m a n u fac t u r e r i t Wi ll im po se a
.

c lose r e x am i n a t io n o f m e r c h a n d is e a t t h e m ill a n d wi ll r e s ult i n t h e

e lim i n a t io n o f t h e r e t u r n o f m e r ch a n dis e wi t h ou t go od r e as o n .

Fo r t he b u ye r , it will r e m o v e c o m pe t it io n fr o m t h e u ns c r u p ul ous
“

c o m pe t it o r w h o ass um es no m e r ch an di s e r is k , b u t b u ys wi t h o u t r e gar d
t o t he s ignific a n ce o f a c o n tr a ct , expect in g lat e r t o r e j ec t or re t ur n
m e r c h a n dis e h e d o e s n o t w a n t .

Fo r t h e s po n ge r , it i n a u gur a t e s a n ew er a i n w hi ch he will be
“

ab le t o c o n d u c t hi s b u s i n ess as a le git im at e m e r ch a n t , r e co gniz ed as

a n e c e ss a ry p a rt o f t h e i n d ustr y no lo n ge r h a vi n g t o d e pe n d f o r hi s
,
s u ccess u po n r e j ect in g m er ch an di se a n d m aki n g r e t ur ns for n o be t te r
r eas o“n t h a n t h at t he pr i n cipal for w h om h e d oes wo rk r e nes ts it .

T he pla n s e ts u p a n o r ga n iz at io n m u t u ally s u pp o rt e t o di s p os e
o f d is p u t es i n a s p ee d y u n b i as e d w a y I ts e st ab lish m e n t s h o uld av o id .

le gal a ct io n s a n d d iv e rt c o n tr o v e rs ies t o a d j u di cat io n b y r es po ns ib le

”
a n d c a pab le m achi n e r y .

I st at em e n t in t he I ron A e Ja n u ar y 15 1 9 1 4 it was poin t ed

n a , , ,

ou t t h a t m a n u fa ct u re rs m ay al s o e t o b lam e for can cell at io n s i n t he

ir o n a n d st ee l i n d ustr y b y se lli n g h e a v ily wi t h ou t d ue r egar d t o t he
a b ili t y o f t h e b u ye r t o c o n s u m e wit hi n t he c o n tr a c t pe ri o d T hi s .

st at em e n t giv es t he followi n g q uo t atio n fr om a prev io us st a tem en t i n

t h e I ron A ge:
“
What is worse m an u fact ur ers h av e s old Wi t h ou t r egar d t o t h eir
,

ab ilit y t o d eli ve r T hey h av e al s o b e e n k n o w n t o fail o n d e liv e ries t o

.

c o n tr a c t c ust o m e rs o n a r is i n g m ar k e t w h ile acce p t i n g e ar ly d e li v e r y

, ,

b us i n ess fr o m o t h e rs W h o gla dly pai d a pr e m i um T h e r e is n o d ou b t .

,

m o r e o v e r t h a t t h e gu a r a n t e e i n g o f p r ice s a gain st de c li n es is a n im po r
,

t a n t it em i n t he m a n u fact ur er s r es po n sib ili t y f or pr ese n t c o n di t io ns

’
.

T hes e g u ar a n t ee s ar e o n e o f t h e e v ils c h ar ge able a gai n st t h e e ar ly

pe r io d o f t h e c o n s o lid a t io n r e gim e i n t h e st ee l i n d ustr y Bu ye r s .

a r gu e d at t h a t t im e t h a t n a t u r al la ws we r e t o a lar ge e xt e n t i n o pe r a
t iv e m ea ni n g t h at t he u nr es tr ain ed c o m pe t it io n t h at h ad pr ev ious ly
—

p r e v a ile d w as g o n e— a n d t h at t h e
pr ice s t h at we r e as k e d w e r e i n a
se n se ar t ifi cial T o stim ul at e d em a n d u n d er s u ch c o n di t io”ns s eller s
.
,

b ook e d la r ge c o n tr a cts t o w hi ch g u ar an t e e s we r e a tt ach ed .

I n a dditio n t o t his q uo t a tio n t h e follo wi n g s u gge stio n was m ad e :

Th e t im e s ee m s o p po rt u n e for a sh o rt e ni n g o f t h e s al e pe r io d ,

s ay t o t h r e e m o n t hs f or j o bb i n g o r m e r c h a n t b u ye rs a n d t o s ix m o n t h s ,

as a m a xim um for m a n u fa ct ur i n g c o n s um e rs I n t h e e xce pt io n a l .

cas e s i n wh ich m an u fac t ur i n g o pe r ati o n s r e q u ir e y e ar ly c o n tr a c ts ,

pr o vis io n m i gh t b e m a d e it h as b e e n s u ggest e d fo r c a n cell a t io n s o f

, ,

u ns pecified t o n n a ge b y q uar t er ly per io ds Wi th m a xim um a n d m i ni m um ,

am ou n ts t h e fo r m e r n ot t o e xce ed t h e latt e r b y m o r e t h a n
,
Sh o rt e ni n g t h e c o n tr ac t pe r i o d is t h e c r u x o f t h e m att e r T h a t wou ld .

go f ar t o w ar d e lim i n at i n g t h e s pe c u l at iv e b u yin g t h a t h as b ee n t h e a r c h
di st u r b e r o f c o n tr a c t r e la t io ns ( I ron A ge Ja n u ar y 1 5 1 9 1 4 p
”
. .
, , ,

O t h e r r e fe r e n ces o n can cell at io ns ar e : T exti le Wor ld Re co r d ,

M a y 1 9 1 5 p 1 1 5 ; v o l 4 5 p 21 0 ; V O l 4 7 p 56 9
, ,
. .
,
T ra ns acti o ns
. .
,
. .

N ati on a l A s s oci a ti on of Cotton M a n uf act u r er s N O 9 0 p p 212 2 1 7 ; ,

.
,
.
—

N o 9 1 p p 25 2 257
.
, . I r on A ge M ay 2 3 1 9 12 p 1 26 6
—
. I r o n A ge
, , ,
. .
,

Feb r u ar y 1 1 9 1 2 p 3 1 7 ,
A m eri ca n M a chi n i s t Ju n e 9 1 9 1 0 p 1 07 7
,
. .
, , ,
. .

U S D e p art m e n t o f C omm e r c e M i s ce lla ne ou s S eri es N o 3 4 Th e

. .
,
.
,

M en s Fa cto ry M ade C lothi n g I n d us tr y p p 24 7 250

’
U S D e p ar t ,
.
—
. . .

m e n t o f C o m m e r ce M i s cella ne ous S eri es N o 32 T he K n i t Un d erwea r

,
.
,

I nd us try pp 1 4 4 1 45 Dai ly N ews R eco r d M ay 20 19 20

, .
-
.
, ,
.
 P AR T VI I

B R A N D S, T R A D M AR K S AN ADV R S N G
E - D E T I I l

HE p r o bl em s in this s e cti o n ill u stra t e s o m e of

hi e f po ints in th e d e t e rm in a ti o n o f br a n d
th e c

a n d tr a d e m a rk p o li ci e s a n d in t h e f o rm u l a ti o n
-

o f a d v e rtisin g p l a ns .

169 . C HI P P E W A C O M PAN Y —
E S T A B L I S H I N G D E MAN D
T h e C hi p p ew a C om p a ny is o r ga niz ed t o m an u fac
t u r e a u t o m o bil e p a rts , s u ch as b ea rin gs , whi ch ar e

pa t e nt e d Wh a t d o es th e c o m p a ny h a v e to c o nsi d e r
.

in d e ci d in g wh e th e r o r n o t t o u n d ert ak e t o e st ablish
a r e p u t a ti o n f o r its p r o d u c t a m o n g co ns u m e rs as w ell

a s a m o n g a u t o m o bil e m a n u f ac t u r e rs ?

‘
R e fere nces tr ad e m ar k s : E d w ar d S R o ge rs
on b r an ds a nd -
.
,
Good Wi ll T rade M a r ks a nd Unf a i r T r ad i n g ( bi b lio gr a ph y)
, , P T . . .

C h e r i n gt o n A dvertis i g a s a B us i ne s s Fo r ce
,
n C o n t i n e n t al a n d C om .

n e cial Ba n k s C hi c ag o A me ri ca n T rad e M a r k s A br oad P ri nte r s

’

; lg
-
, , .

n
R e fe r e n ces rt isin g :
P T C h e r in gt n , A d vertis i ng as a
o n ad v e . . o
Bus i nes s F r ce a n d o B k— 1 9 1 6A d verti si ng
M e lvi n T C pe la n d , oo . . o
u
B s i nes s S ta ti s tics ,
. D St a r ch
A d verti s i ng H L H lli n gw rt h ,
. . . . o o
Advertis i n g a nd S elli n g J B O pd yc k e , A d verti s i ng a n d S e lli n g P rac
. . .

t ice J L M a hi n , A d vertis i n g— Sell i ng the C n s m er C rt is P bli s hi n g

. . . o u . u u
o
C m pa n y, S elli ng F r ces W A S hr er , A na l ytical A d verti s i n g
o . . . .

H T i pe r , P ri nci ples of A dvertisi ng

. T i ppe r , G B H t c hkiss . . . o
H L. O lli n gwor t h , a n d F L P a rs ns , A d verti s i n g, I ts P ri n a p le s a
. . . o
P ractice . . . o o
A P J h ns n , Li bra r y of A d ve rti s i n g , 6 v l um e s E E o . . .

C alki ns , Th e B us i n es s of A d vertis i n g H W H es s , P r od ucti ve Ad ver . . .

P ri nters I n k Ad vertisi ng a n d S ell i ng

’
ti si ng . . .
26 4 MARK E TIN G PR O BL E M S
1 70 . J A CK SO N B R O T H RS
E —
E ST AB L I S H I N G D E MAN D
J a cks o n B ro th e rs a fir m l o cat e d in a city in the
,

M i dd l e W e st m anu fa ct u r e bra ss f o u nts f or o il st o v e s

, .

Th e ir p ro d u c t is n o t p a t e nt e d ; it is s o l d e nt ir e ly t o O il
st o ve m a n u fac t u r ers Wh a t f a ct o rs m u st this fir m
.

co nsi d e r in d ec i d in g wh e th e r o r n o t t o u n d e rt a k e to

e st a blish a n in d ivi d u a l r ep u t a ti o n f o r its p r o du ct am o n g

co ns u m ers wh o u se o il st o v es ?

171 . BE R K E LE Y SH O E C O M P AN Y —
USE OF B R AN DE D
P AR T S
I n 1 9 1 6 th e G o o d yea r R u bb er C om pa ny co mm en ce d
a wi d e cam p a i gn f o r t h e s a l e o f N eo lin s o l e s Thi s
l
.

p r o d u c t w a s br a n d e d a n d a n e xt e nsiv e a d v e rt isin g
,

c am p a i gn t o co ns u m ers wa s u n d e rt ak e n Ab ou t th e .

s am e tim e o th e r m a nu fa ct u r ers a ls o pu t fibr e s o l es on

th e m a rk e t .

T h e Be rk e l e y Sh o e C o m p a ny p ro du cin g m en s
’
,
’
sh o es o f m ed i u m q u a lity s o l d u n d er th e m a nu fa ct u r er s
bra n d dir e ct t o r e t a il m e r ch ants h a d o cca si o n t o co n ,

si d e r wh e th er it sh o u l d u se br a n d ed fibr e s o l e s in its
p r o d u ct .

Ass um ing th at th e fibr e s o l e s w e r e du r abl e was it ,

a d v isab le f o r th is m a n u f a ctu r er t o u s e b r an d e d fib r e s o les ?

T o m ee t t h e fibre s o l e s o n e o f the
c om p e titi o n of ,

l a r ge t a nn e rs st a rt e d a n a d v ertisin g ca m p a i gn fo r
br a n d ed l ea th e r s o l e s I n h ow f ar sh ou l d th e s am e
.

fact o rs go v e rn t h e d e ci si o n o f th e B erk e l e y Sh o e C o m
p a ny r egar d in g th e u s e o f br a n d e d l ea th e r s o l e s as in
d e c i d in g u p o n th e u s e o f br a n ded o r u nbra n ded
fibr e s o le s ?
C R Jo h ns o n
.
“
.Was Short age o f R aw M at eri al C a pit alize d in
,

N eo li n Adv e rt is in g?
”
P ri n ter s I
’
n k, M ay 3 , 1 9 1 7 , p p 3— 1 2
. .
 BRAN DS TRA D E MA RK S A D V E RTI SIN G
,
-
, 265

1 72 . M E R R I MA C FLO U R M I LL I N G C O M P A N Y
C O O P E R A T I V E SA L E S P L AN
T h e M e rr im a c Fl o u r M illin g C o m p a ny , with a
p l a nt o f b arr els d a ily cap acity , l o ca t ed in M inn e
s o t a , is r e q u est e d t o j o in with fiv e o th e r M inn es o t a
m i lls in th e o r ga niz a ti o n o f a co o p e r a tiv e s e llin g a ge n cy .

T h e d a ily ca p ac iti e s o f th e o th e r m ills a r e a s f o ll o ws

M ill A , bbls ; M ill B ,
. bbls ; M ill C , 900
.

bbls ; M ill D ,
. bbls ; M ill E ,
. bbls .

Th e s e mi lls h e r e t o f o r e h a v e s o l d th e ir p r o d u cts
u nbr a n d e d thr o u gh a ge nts a n d d ir e c t t o wh o l e s a l e rs

a n d b a k e rs Th e s e bills , in cl u d in g t h e M e rri m a c
.

C o m p a ny , h a v e yi e l d ed a v er a ge p r o fits .

T h e p r op o s e d p l a n p r o v i d e s f o r th e in co r p o r a ti o n
o f t h e s e llin g a ge n c y with a n o m in a l ca p it a l o f

in six sh ar es o f e a ch E a ch m ill is t o h a v e o n e
.

sh ar e T h e s e llin g a ge n cy is t o b e m a n age d e ntir e ly

.

by a b oa r d o f six d ir e c t o rs , o n e fr o m ea ch m ill Th is .

a ge n cy is t o h av e co m p l e t e c o ntr o l o v e r t h e m a rk e tin g

o f t h e e ntir e p r o d u c t o f t h e m ills A n a d v ertis e d

.

br a n d is t o b e d e v e l op e d , a n d in a d d iti o n t o th e c e ntr a l
o ffi ce in M inn ea p o lis br an ch O ffi c e s will b e o p e n e d in

N ew Y o rk a n d B o st o n , o th e r br a n ch e s t o b e a dd ed as
th e gr o wth o f th e b u sin e ss w a rr a nts T h e m a n age
.

m e nt o f e a ch m ill , in cl u d in g t h e p u r ch asin g o f r a w
m a te ri a l , is t o r em a in in th e h a n d s o f its p r e s e nt o w n
e rs. Af t e r p a yin g d ivi d e n d s a t th e r a t e o f 6 % p e r
year o n th e cap it a l st o ck o f th e s e lling a ge n cy , p r o fits
ar e to b e d ivi d e d in p r o p o rti o n t o t h e c a p a citi e s o f

th e mi lls .

Sh ou l d th e M e rrim ac Fl o u r M illin g C o m p a ny
e nt e r th e p r o p o s e d o r gani z ati o n ?

1 73 . M U S K E G O N C O M PAN Y —
G O O WI
D -
LL
T he M u sk e go n C o m pa ny m a n u f act ur es a h i gh
q u a lity fo o d p ro d u ct th a t is wi d e ly a d v ertis e d B e cau s e .
26 6 MARK E TIN G PR O BL E M S
of th e risk of b a rrass m e nt to th e p la ns o f
p o ssibl e em

th e co m p a ny fo r whi ch this n a m e is a ss u m e d it is ,

im p ra cti ca l t o d es crib e t h e p r o d u c t e x ac tly .

I n th e m a n u fa ct u re o f this p r o d u c t o n e o f th e chi e f
m a t eri a ls is A a n d th e p r o d u c t h as b ee n s o l d in a ll
,

p a rts o f t h e Unit ed St a t e s a s th e A C p r o d u c t o f th e
M u sk ego n C o m p a ny T h e s u pp ly o f m a t eri a l A is
.

lim it ed a n d hi ghly irr egu l a r fr o m y ea r to y ear .

A no th e r m a t e ria l B co u l d b e u s ed in p l ace o f
, ,

m a t e ri a l A with o u t th e l ea st i nj u ry t o th e p r o d u ct .

I f th a t w er e d o n e h o w e ve r th e p r o d u ct co u l d n o t b e
, ,

s o l d as th e AC p ro d u ct b e cau s e o f th e p u r e f o o d
,

l aws T h e su pp ly o f m at e ri a l B is la rge a n d re gu l ar
. .

T h e c o m p a ny h a s a l a r ge st o ck o f m a t e ri a l B o n h a n d ,

a c qu ir e d f o r o th e r p u rp o s e s f o r whi c h it ca nn o t n o w

b e u s ed Fr o m th e c o ns u m er s st a n dp o int th er e is
’
.
,

n o d i ff e r e n ce in th e q u a lity o f th e p r o d u ct wh e th e r

m a t eri a l A o r m a t e ri a l B is u s e d Fr o m th e p ro d u c.

ti o n s t a n d p o int th e co m p a ny w ou l d b e a ss u r ed o f
,

gr ea t e r r egu l a rity in th e o p e ra ti o n o f its p l a nt if it ,

w e r e a bl e t o u s e e ith e r m a t eri a l A o r m at e ri a l B a t
its o p ti o n A la rge am ou nt o f goo d will is a tt a ch e d to
.
-

th e bra n d o f th e AC p r o d u ct .

Sh o u ld th e M u skego n C o m pa ny intro d u ce a n ew
br a n d fo r th e p r o d u ct m a d e fr o m m a t e ri a l B a n d c o n
tin u e th e AC p r o d u ct o r sh o u l d it intr o d u ce a n e w
,

bra n d in th e m a nu factu r e o f whi ch b o th A an d B

,

co u l d b e u s e d thu s s u p e rs ed i n g e nt ir e ly th e AC
,

p ro du ct ? O r sh o u l d it s o lv e this p ro bl em in s om e
o th e r w ay ?

1 74 . GR E E N WO OD AN D DAY —
PA C K I N G H O SI E R Y
T h e fo ll o win g st a t em e nt w a s iss u e d O ct o b e r 1 s t ,
1 9 1 8 , by t h e C o ns e rv a ti o n D ivisi o n o f th e War
I n d u stri es B o ar d :
 B RAN DS TRA D E MARK S A DVE RTI SIN G
,
-
, 267

TO H o s iery M an u fa ct u r er s :
In t h e pr e s en t e m er ge n cy it i s o f prim ary i m po rta n ce
tha t t he co u n try s r es o u r ce s b e u s ed t o f u ll a d va n t a ge a n d
’

tha t w e h u s b an d o u r s u pplie s o f m at eri al e q u i p m e n t a n d ,

ca pit a l t o a id in ca r ryi n g o n t h e w a r I n a d d i t i o n it i s .
,

i m pe r ative t o co n s erve every a va i la b l e c u b i c i n ch o f ca r

carryi n g ca pa city T h e C o ns er va ti o n D ivi s i o n o f t h e W a r
.

I n d u s tri e s B o ar d in co o per at i o n w it h va r i o u s in d u s t r i e s
, ,

has a lr ea dy p u t i n t o e ffect p lan s o f e co n o m y in p a ck i n g in

o r d e r tha t m at eri a ls a n d r a i lr o a d e q u i p m e n t c a n b e s av e d
an d t h e n u m b e r o f a va il a b le f r e i gh t c a r s b e i n cr e a s e d t o
a ss i s t in f u rth e ri n g t h e w a r p r o g r a m .

It a pp ear s th at m an u f a ct u rer s o f ho si e r y can m at eri ally

re d u ce t h e b u lk o f t heir f r e igh t p a ck a ge s b y s u b s tit u ti n g
t h e p a p e r b u n d l e f o r t h e ca r db o a r d b o x T he e n c lo s e d .

pro gr a m h as b e e n d r awn u p wit h t h e a ss i s t a n c e a n d a dvi ce

o f r e p r e s en t ativ e s o f a ll b r a n c h e s o f t h e i n d u s t r y It wi ll .

b e m a d e e ffe ctiv e a s it i s n o w i ss u e d u nl e ss s u b s t a n ti a l
re as o n s a r e i m m e d i at ely pr e s e n t ed t o Sh o w tha t b y s o m e
m o d ifi cati on t h e nee d s o f t h e go v er n m e n t ca n b e m e t m o r e
e ff ect u ally .

In p u tti n g t h e provi s i o n s o f thi s pro gram i n t o e ffe ct it

i s of co u r s e e ss e n ti a l tha t car e b e e x er ci s ed in t h e p a ck i n g
, ,

o f a ll m er ch a n d i s e f o r s h i p m e n t n o t o n ly t o r e d u c e t h e
,

a m o u n t o f s p a ce in fr e i ght p a ck a ge s b u t a d e q u at ely t o ,

prot ect t h e go o d s fro m d a n ge r o f i n j u r y in tr a n s it Fo r .

ins t an ce w e wo u ld s u gge s t t h e u s e o f N O 1 s u l phit e

,
.

wr a p pi n g p a per o f n ot l e ss t han 50 lb s ( 24 x3 6 4 80 s he et s t o .
,

t h e r ea m ) f or t h e wr a p p i n g o f p a ck a ge s o f o n e h a lf d o z e n
,
-

a n d d o z e n s u it s o f u n d erwea r Fo r t h e wr a ppi n g o f h o s i ery

.

u p t o a n d i n cl u d i n g o n e d o z e n p a ir s t o t h e p a ck a ge n o t l e ss ,

than 4 0 lb wr a ppi n g p a per sho u ld b e u s ed Wh e r e n e ce s

. .

s ary to pro t ect t h e m er ch a n d i s e f ro m i n j u ry car d b o ard ,

i n s ert s sho u ld b e u s e d in p a p er pa ck age s .

Whi le t hi s s ch ed u l e i s n o t o per at ive u n til J an u a r y 1 ,

19 1 9 it i s u n d er s t o o d t h a t a ll m a n u fa ct u r er s wil l p u t it
,

i n t o e ffe ct as r a pi d ly a s p o ss i b l e We s h a ll b e gl a d t o r eceiv e
.

an y s u gge s ti o n s t h a t yo u m a y h a v e t o s u b m it w h e r e b y

g r e a t e r e c o n o m i e s c a n b e b r o u gh t a b out .

Will yo u pl ea s e a ck n owl e d ge r e cei pt o f thi s l ett er a n d

s ched u l e pr o m pt ly a ss u r i n g t hi s D ivi s i o n o f yo u r l o ya l a n d
,

who l ehe art ed co o p e r a ti o n whi ch wi ll a id m a t eri a lly in

,

c arryi n g o u t t h e w ar p r o ga m .

C o n s erv ati o n D ivi s i o n ,

274 6 6 00
-
Wa r I n d u s t r i e s B o ard .

S C H E DU E L FO R PAC K I N G HO SI E R Y
1 . All
8 4 n ee d l e a n d 1 00 n e e d le ga u g e c o tto n h o s e a n d
half ho s e to be wr a p ped i n pa per bu nd les , w it ho u t ca r d b o ard ,
o n e d o z e n pa i r s t o a b u n d le .
26 8 MARK E TIN G PR O BL E M S
2 All co tt o n h alf h o s e 1 9 8 ga u ge o r u n d e r a n d a ll cotto n
.

hal f ho s e weighi n g m ore th an 1 lb 8 o z p er d o z e n , a n d s elli n g

. .

u p to p e r d o z en a t t h e m ill to be wr a pp ed i n p a p er
bu nd les with o r witho u t car d b oard .

3 All l a d i e s c ott o n ho s e 1 9 8 gau ge o r u n d er a n d wei gh

’
.

in g ove r 1 lb 1 2 o z p e r d o z en a n d s e lli n g u p t o
. .
p er
d o z e n at t h e m ill to be wr a pped i n p a p er bu nd les with o r
witho u t car d bo a rd .

4 All go o d s com m er ci a lly k n o w n a s

. o u t s iz e s or
”
extra siz e s to be wr a pp ed i n p a p er bu n dles , o n e d o z e n p air s
to t h e b u nd le , o r in car db o ar d b o x es o n e d o z en p a ir s to
t h e b ox .

5 All o ther cott o n , li s l e a n d m er ceriz e d l ad i e s h o s e an d

’
.

h alf hos e to be wr a pped i n p a per bu nd les , o n e d o z en pair s t o

th e b u n d l e , o r p a ck ed i n ca r dboar d boxes , o n e d o z e n pa irs
t o t h e b ox .

6 All inf ant s cotto n , silk , li s l e an d cas hm er e s o ck s a n d

’
.

s t o ckings s elling u p t o p er d o z e n a t t h e m ill to be

p a cked i n boxes , n o t l e s s than o n e d o z e n p air s t o t h e b o x .

7 All i n fan t s co tt o n , s ilk a n d li s l e a n d ca shm er e s o ck s

’
.

an d s t o ckings s elli n g a t o v er p er d o z en a t t h e m ill to

be p acked i n box es , n ot l ess than o n e- h alf d o z e n p airs to
t h e b ox .

8 All m i s se s a n d b oys co tt o n ribb ed an d flat ho s i ery

’ ’
.

”
s e lli n g u p t o p er d o z en o n 8 at t h e m ill to be wr a p p ed
i n p ap er bu n dles , o n e d o z en pa ir s t o t h e b u n d l e .

9 All m i ss e s an d b oy s co tt o n ri bb ed a n d flat h o s i ery

’ ’
.

”
s e l ling at p er d o z e n o n 8 a n d u p t o p er d o z e n
a t t h e m ill to be p ack ed i n boxes , o n e d o z e n p a ir s t o
"
on 8
t h e b ox .

1 0 All m i ss es an d b oy s co tt o n ribb ed an d flat h o s i ery

’ ’
.

”
s elli n g at p e r d o z e n on 8 a n d o v er at t h e m ill to be
p a c k ed i n bo x e s , o n e -
half d o z en p a ir s t o t h e b o x
.

1 1 All silk an d artifi ci a l s ilk h o s i ery s ell in g a t le ss tha n

.

p e r d o z e n at t h e m ill to be p a ck ed i n boxes , o n e d o z en
p airs t o t h e b ox .

1 2 All s i lk a n d arti fici al s i lk h o s i ery s elling at

.

p e r d o z en a n d u p t o p er d o z e n a t t h e m ill to be p a ck ed
i n boxes , n o t le s s th an o n e ha lf d o z e n t o t h e b ox
-
.

1 3 All m erin o , woo l a n d wor s t ed h alf ho s e 1 20 n e ed l e

.

ga u ge an d u n d er , a n d all o the r s we ighin g o v e r 1 lb 1 0 o z . .

p er d o z en an d s ell in g u p t o p er d o z en at t h e m ill
to be wr app ed i n paper bu n d les , o n e d o z en p airs t o t h e
b u n d le .

14 All m erino , woo l a n d w or s t ed hal f hos e, over 1 3 6

.

need le gau ge an d s ellin g at p er d o z en or m or e a t t h e

m ill to be packed i n boxes , o n e d o z e n pair s t o t he b o x .

1 5 All l a d i e s an d chil d re n s m erin o , wo o l an d wor s t e d

’ ’
.

h os iery s ellin g u p t o p e r d o z en a t t he m ill to be packed

i n boxes , o n e d o z en p airs t o t h e b ox .
 B RAN DS TRA D E MARKS A D VE RTI SI N G
,
-
, 26 9

All la di es
16 .
’
hil dren s m er in o wo o l an d wors ted
an d C
’
,

hos i ery s elling a t p e r d o z e n o r m o r e a t t h e m i ll to be

p ac k ed i n boxes n ot l es s th a n o n e h a lf d o z en p a ir s to t h e b ox
,
-
.

17 All s e con d s O f m en s wo m en s chil d r en s a n d

’ ’ ’
.
, , ,

infan t s hos i ery s ellin g u p t o

’
p er d o z en a t t h e m ill to
be wr a pp ed i n p a p er bu nd le s on e d o z en pa ir s t o t h e b u n d le
, .

1 8 All s e co n d s s el li n g f o r
.
p e r d o z e n o r m or e a t
t h e m ill to be p a cked i n box es o n e d o z en p air s t o t h e b o x
, .

1 9 All h o s i ery p a ck e d in b o x e s to be p a ck ed n ot le s s tha n

.

f ou r p a i r s to the box .

20 Wh en p a ck ed in b u n d l e s , s u ffi ci e n t q u a n tity a n d
.

s tren gt h o f pa p er to b e u s ed c om p l et e ly t o e n c l o s e t he
ho s i ery T h e b u nd l e s t o b e pro p erly s ec u re d with e ithe r
.

g u mm ed s tri p s o r twi n e o f s u ffi ci en t s tr e n gth t o ins u re t h e

s a fe arriva l O f t h e b u n d l e s a t d e s tina ti o n .

2 1 All b o x e s t o b e m ad e in t h e s m all e s t d i m en s i o ns
.

p o ss ib l e ; m er cha nd i s e to fill t h e b o x e s c om p l et ely .

22 Al l b o x fl i e s to b e e l im in at ed
. .

23 T h e u s e o f wr a pp in g p a p er f o r p a ck i n g h o s i ery , wh en
.

p a ck ed in b o x e s a n d th e n in c as e s f o r shi pm ent , to b e
e lim inat ed .

24 . C as e s u s ed in p a cki n g b u n d l e s o r b o x e s f o r shi pm ent

to be filled co m pl et ely with m e r ch an d i s e a n d a ll wa s t e
s pa ce to b e e li m in at ed .

25 Wo od e n c as e s t o b e m a d e with s o li d o r c l o s e ly fitte d
.

s i d e -en d s , t o p a n d b ott om s e cu re ly f as t e n e d Wo o d en cas e s .

o f u n u s u a l s iz e f o r c arry in g u n u s u al w e i ght t o b e s tri pp ed o r

re i n f or ced by cl ea ts .

26 Fi b re b o x e s , wh en u s ed , t o co m p ly with s t a nd ard
.

r ailro ad class ifi ca ti o n r eq u irem ent s .

G re e nwo o d a n d D a y , a firm o f d ry goo d s wh o l e

s a l e rs in a n E ast e rn city , a gr ee d t o c a rry o u t this
s ch e du l e w ith th e tra d e b e ca u s e o f w ar c o n d iti o ns .

Th ey m a d e th e a greem e nt , h o w e v er , with d eep r e l u e

t a n ce T h e sa l e s o f th is firm in a ll d e p art m e nts w er e
.

o ver a y ea r H o si e ry w as a s u bst a nti a l

.

it e m in th e ir s al e s T w o thir d s o f th e h o si e ry th a t
.
-

th e y s o l d w as p u t o u t u n d er th e ir o w n br a n d s .

Wh y w as thi s fir m r el u ct a nt t o a do p t thi s s ch edu l e ?

27 0 MARK E TIN G PR O BL E M S
1 75 . V I CT O R C O M P A N YR E LAT I O N O F L A B O R P O LI C I E S
—

To SA L E S P O L I C I E S
T h e Vi ct o r C o m p a ny o p e r a t e s a f a ct o ry in a c ity
in O hi o f or th e m a n u fa ct u r e o f w o r k m e n s o v e ra lls
’
.

T h e c o m p a ny p l a ns t o ex p a n d its m ark e t , a n d f o r this

p u rp o s e co nt e m p l a t e s an e xt e nsi o n o f its p l a nt Up .

to th e p r es e nt t im e , b e cau s e o f th e p e rs o n a l vi ews o f
th e ge n e r a l m a n age r o f th e co m p any , its p l a nt h as
b e e n o p era t ed as a n o p e n sh o p E m p l o ye e s h av e b een
-
.

fr ee t o j o in a tr a d e u ni o n , b u t th e u ni o n h as n o t b ee n
r eco gniz ed in co ll e ctiv e b arga inin g A d em a n d for th e
.

r e cogniti o n o f th e u ni o n h as r ece ntly b ee n p r e s e nt e d

by a p o rti o n o f th e em p l o y e es .

Ho w will th e d e cisi o n o f th e m a n a gem e nt o n th e

r e co gnitio n o f th e u ni o n infl u e n ce th e com p a ny s s al es
’

p o li ci e s ?

1 76 . K N I G HT C O M P A N Y R O Y A L FL O UR
—
M I LL S
BR A N D S
T h e K ni ght br a n d o f fl o u r is a p riv a t e br a n d o f
K ni ght C o m p a ny , B o st o n wh o l es a l e rs , f o r who m
t h e fl ou r is m a nu fa c t u r e d by th e Sp a rr o w Fl o u r M ills
in M inn es o t a This bra n d o f fl o u r is a d v ertis ed a n d
.

s o l d wi d e ly in N ew E n gl a n d I t is s a i d to b e v ery
.

sim i lar to th e R o ya l bra n d o f fl ou r w hi ch is m an u fac

tur e d by th e R o ya l Fl o u r M ills in th e s a m e di stri c t in
M inn e s o t a in whi ch th e Sp arr o w mi lls ar e l o cat e d .

T h e R o y a l br a n d is a d v ertis ed n a ti o n a lly .

I s th er e a n y r e a so n why th e c o ns u m er in N ew
E n gl a n d sh ou l d fa v o r o n e o f th es e bra n d s a s a ga inst
th e o th er ?
 B RAN DS TRA D E MARK S A D VE RTI SI N G
,
-
,
27 1

’
1 77 D I A M O N D ST O V E C O M P AN Y
.
—
WH O LE SALE R S
B RA N D S
T h e D iam o n d St o v e C o m pa ny o p e ra t e s a m edi um
siz e fa ct o ry fo r th e m a n u fact ur e o f o il st o v e s T h e .

e nt ir e o u t p u t o f t h e p l a nt is s o l d t o 1 5 t o 20 wh o l e

s al ers u n d e r th e wh o l es a l e rs p riva t e br a n ds Th e re
’
.

a r e m i n o r v a ri a ti o ns in t h e p r o d u c t m a n u f act ur e d fo r

e ach wh o l e s a l e r with th e r e s u lt th a t 9 2 siz e s a n d typ e s

o f st o v e s a r e m a d e . O f s e v era l l a rge c o m p etit o rs s e ll

in g th e ir p r o d u c ts u n d e r m a n u fac t u r e rs br a n d s , ea ch
’

p r o d u ce s 1 2 to 25 typ e s a n d si z es .

Wh a t is to b e s a i d in f a v o r o f th e po li cy o f th e
D i am o n d St o v e C om pa ny ? Wh a t ar e its d r a wb a cks ?

’
1 78 . A LLAG A S H C O M P A N Y —
WH O LE SA LE R S B R A N DS
T he A llagash C o m p a ny m a nu fa ct ur in g e d ge t o o ls
,

o f go o d q u ality ha s b ee n s e lli n g its p r o d u c t to wh o l e

,
’
s a l ers u nbran d e d o r b earin g wh o lesa l ers bra n d s .

Su c h bra n d s as h a v e b ee n u s e d h a v e n o t b ee n giv e n
m u ch si gnifi ca n ce o n this p r o d u ct T h e All a gas h
.

C o m p a ny has r ece iv e d a n o ff er fro m a str o n g wh o l e

s a l e h ard war e com pa ny t o t a k e th e e ntir e p rod u c t o f
th e A ll agash C o m p a ny f o r a p e ri o d o f thr e e y ea rs t o
b e s o l d u n d e r th e wh o l e s a l e r s bra n d T h e p ri ce th a t
’
.

is off er e d is s atisfact o ry T h e wh o l es a l e r s bra n d th a t

.
’

is to b e u s ed o n th es e t o o ls is th e s am e bran d t ha t is
a p p li e d t o a wi d e v a ri e ty o f o th e r a rti c l e s .

Sh ou l d th e A lla ga sh C o m p any a ccep t this o ffe r ?

27 2 MARK E TIN G PR O BL E M S
1 79 . OSW E G O P A P E R C O M P AN Y —
FO R E I G N T R ADE
B R AN DS
T h e O sw ego P ap e r C o m p any h a s a l a r ge d o m e sti c
b u sin ess a n d d u rin g th e wa r it a l so h ad a s u bst anti a l
v o l u m e o f e xp o rt o r d e rs , p a rti cu l a rly fr o m So u th
A m eri ca Fo r s e v e ra l yea rs th e co m p a ny a ccep t e d
.

o r d e rs fr o m e x p o rt h o u s e s in N e w Y o rk Th e s e e x p o rt
.

h o u s e s insist ed u p o n th e u s e o f th eir p riv at e bra n d s o n

this pap e r I n th e d o m e sti c tra d e th e com pany h a s
.

s o l d its p r o d u ct to j o bb e rs e ntir e ly u n d e r its o w n bra n d ,

bu t in o r d e r to o bt a in a sh a r e in th e f o r e i gn b u sin e ss it
a ccep t e d th e s e o r d e rs u n d e r t h e c o n di ti o ns p re s crib ed

by th e e xp o rt h o u s es T h e O swego P ap e r C o m pa ny
.

fo u n d th a t it wa s fo r ce d to b id o n a ll r e o r d e rs b e cau s e
o f th e co ntr o l o f th e tr a d e m a rks by th e e x p o rt h o u s e s
-
.

I t was p r op o s ed th a t a n ew ex p o rt com p a ny sh o u l d
b e e st a blish ed fo r whi ch th e Osw ego P a p e r C o m p a ny
sh o u l d p ro vi d e a large p o rti o n o f th e cap ita l with t h e
d e fi ni t e u n d e rst an d in g th a t this ex po rt co m p a ny w o u l d
s ell th e p ro du c t O f th e O sw ego P ap e r C o m p a ny u n d e r
th e O sw e go tr a d e m a rk .

Sh o u l d th e O swego P ap er C o m p a ny h a v e a ccept ed
this p la n ?

1 80 SA G I N AW SO A P C O M P AN Y— FO R E I G N T R ADE
.

BR A N D S
T h e Sa gin a w So ap C o m p a ny m a n u f act u r e s s co u r
in g s o ap f o r sa l e u n d e r its o w n tr a d e-m ark in th e
Uni t ed St a t es R e ce ntly th e c o m p a ny r e ce iv e d s e v e r a l
.

o r d ers fr o m im p o rt e rs in So u th A m eri ca Th e s e im
.

p o rt e rs , h o w e v e r , insist e d u p o n th e u s e o f th e ir o wn
p riv a t e bra n d s o n this s oap T h e s oap is o f goo d
.

qu a lity an d c an h o l d its o w n in co m p e titi o n o n e ith er

a p ri ce or a q u a lity b a sis .
 B RAN D S TRA DE MARK S A D VE RTI SIN G
,
-
, 27 3

Sh ou ld t he Sagin a w Soap C o m p a ny h a v e a ccep t e d

th es e o r de rs fr o m Sou th Am eri can i m po rt e rs u n de r
th es e co n d iti o ns ?

18 1 . B R O A DW A Y D E P AR T M E N T ST O R E —
P R I VAT E
B R A N DS
T h e Br o ad wa y D ep a rt m e nt St o r e in N ew Y o rk
C ity o p er a t es a sh o e d ep a rt m e nt in whi ch t h e a nn u a l
s a l e s ar e a y ea r As a m att er o f p o li cy , this
.

st o r e s ells o nly sh o e s th a t b ea r its o w n n am e o r th a t

a r e u nbr a n d ed I t p la ce s l a rge o r d e rs with m a n u fa c
.

t ur ers wh o ad v ert is e th e ir o wn tr a d e- m arks , b u t th e

B roa dw a y St o re re f u s es to h a v e th e m a nu fact u r e rs ’

trad em a rks o n th e sh o es th a t it p u r ch a s es T h e p u r .

ch as e p ri ce s a r e a b ou t t h e sa m e f o r t h e p riva t e bra n d -

’
sh o es a s fo r sh oe s b ea rin g th e m a n u fa c t u r e rs tra d e
m a rks . T h e B r o a d wa y St o r e a ls o b u ys fr o m o th e r
’
m a n u f a ct u r e rs w h o m ak e o nly r e t a il e rs a n d wh o l es a l e rs
’

p riv a t e -
bra n d sh o e s .

T h e Br o a d w a y St o r e s ells b o th hi gh p ri ce an d -

m ed i u m p ri ce sh oe s
-
I t s ee ks t o k eep a br ea st o f
.

styl e ch an ges T h e Bro ad w a y St o r e a ls o giv e s co n

.

sta nt a tt entio n t o t h e d e v e l o pm e nt o f n ew l a sts th a t

will b e tt e r m ee t th e n eed s o f its cu st o m e rs .

I s th e Bro a d wa y St o r e j u stifi e d in its a d h e r e n c e to

this p rivate bran d p o li cy ?
- 1

‘
A t t s a em e n t Of t he vi e ws of r
s e v e al m er c h a n ts o n r et ailers ’

pr iv a t e b r a n ds is gi ve n i n P ri nter s I M a r c h 2 7 , 1 9 13 , p p
’
nk, . 1 08— 1 1 2 .
274 MARK E TIN G PR OBL E M S
182 N I AGAR A C L O TH I N G C O M P AN Y
.
—
R E TA I LE R S
’

B R A N DS
T h e N i agara C lo thin g C om p a ny , R o ch est e r , N ew
Y o rk , whi ch m a nu fact u r es m e n s c l o thing O f go o d
’

q u a lity , h as a do p t ed th e p o li cy o f s ellin g its p ro du ct t o

r e ta il ers to b e s o ld u n d e r th e r e t ail e rs p riva t e l ab e ls
’
.

T h e e ntir e o u t p u t o f this com p a ny is d ispo s ed o f in

this way .

Ho w d o es this p o li cy a ff ec t th e s ellin g p robl em s o f

th e N i aga ra C l o thin g C o m p a ny ?

1 83 . U N I TE D ST AT E S R UB BE R C O M P A N Y —
BL AN K E T
T R A D E -
M AR K

A c co r d ing to a st a t em e nt in P r i n ter s I n k in ’

th e Unit e d St at e s R u bb e r C om p a ny h ad d eci d ed t o
a d o p t a bl a nk e t tr a d e m ark t o b e u s e d o n t h e p r o du cts
2 -

o f its u bsi d i a ry co m p a ni e s I t w a s st a t ed th a t this

s .

tr a d e m ark wa s to r e s em bl e a ribb o n c om p o s ed o f
-

thr ee s tri p e s o f e qu a l w id th th e o n e in th e c e nt e r ,

b e ing whit e a n d th e o th e r two bl u e T h e s ea l o f t h e .

Unit ed St a t es R u bb e r C o m pa ny o r th e tra d e m ark o f -

th e p arti cu l a r p ro du ct b e in g a d v ertis e d o r s o l d was

1
P ri n ters I
’
n k, M ar ch
3 0, 1 9 1 6 , p p 25— 27 . .

3
Ar m ur o o o ”
C m pa n y d ev e l pe d t h e O v e r Lab e l as a bla nk e t
“

ou
tr ade m ar k for m an y o f t h e Ar m r pr d cts P ri n ter s I n k , Ja n ar y
-
’
o u . u
. u
23 , 19 1 3 , pp 3 — 1 0 ; Fe b r ar y 27 , 1 9 1 3 , pp 3 — 8 T h e N K Fai r b a nk
. . . .

o
C m p a n y, o n t h e t h e r h a n d , whi ch m a n ufa ct r es S n w Whi t e ,
o u o
o o
Fair co a n d B ar s H e a d f or s h rt e ni n g, C o tt olene , a c ki n g fat , C v ,
’
oo o o
o o o
a s a la d o il, G ld D ust , Fai r y T ile t S a p , Fair y Flak es , P um m o h an d
o o o
s a p , G lyce r in e t ar s a p , P lly P r im s c r in g s a p , S unn y M n d ay, ou o o
u
Sa n t a C la s , C lair e tt e , D a n d y, Ar k , M as c t , a n d C hi ca g Fam ily o o
u o o
la n d r y s a ps , h as a v id e d t h e us e o f a bla nk e t tr ad e- m ar k a n d has
n ot s ou o u
gh t t id e n t ify t h ese pr od c ts wit h t h e n am e o f t he c m pa n y o
u
m a n f ac t u r i n g t he m ’
. u
P ri n ter s I n k , J n e 1 2, 1 9 1 9 , pp 1 7— 1 8 O t h e r . .

r efer e n ces o n t he us e o f t h e bla n k e t tr a de m ar k s ar e P ri nters I n k ,

-
’

u u
Fe b r ar y 25 , 1 9 1 5, pp 4 1 — 56 ; A gus t 1 9 , 19 1 5, pp 3— 8, 8 5- 9 1 ; Feb
. .

r u ar y 1 , 1 9 1 7 , pp 3— 8 , 95- 1 05 ; July 1 0, 1 9 1 9, pp 3- 6 , 1 4 1 — 14 6
. . .
 B RAN DS TRA D E MA RK S A D VE RTI SIN G
,
-
, 27 5

to b e s u p erim p o s ed on ribb o n T h e si z e o f thi s

th e .

n e w tr a d e m a rk w as t o v a ry a cco r d in g t o th e p r od u ct
-

o n whi ch it w a s u s ed I t w a s st a t ed th a t th e trad e
.

m ar k w o u l d a p p e a r in s o fa r a s p o ssibl e o n th e go o ds
th em s elv e s a n d a ls o o n t h e p a ck a ge s I t w as t o b e .

u s e d f u rth e rm o r e i n s o m e w a y in a ll t h e a d v e rtisin g
, ,

o f th e Unit e d S t a t e s R u bb e r C o m p a ny .

I t w a s st a t e d th a t a t th a t ti m e t h e Unit e d St a t es
R u bb e r C o m p a ny h a d a lli e d with it a b o u t fifty s u h si
d i a ry co n cerns whi ch m a n uf a ct u r e d a gr o u p o f p r o d u cts
ea ch u sin g a v a ri e ty o f w e ll e st a blish ed tra d e m a rks
- -
.

O v e r o n e th o u s a n d s ep ara t e a rti cl e s w e r e m a n u fa ct u r ed ,

in cl u d in g a u t o m o bile t ire s fo o tw ea r gl o v es bi cy cl e
, , ,

tir e s b a thin g ca p s a n d m a ny o th e rs
, , .

Wh a t a d vant ages m i ght b e e x p ect ed t o a cc ru e t o

th e Unit e d St a t e s R u bb e r C om p a ny fr o m t h e a d o p ti o n
o f this p o li cy ? Wh a t a pp ar e ntly w o u l d b e t h e O bst a c l e s

to b e o v e r co m e in m akin g i t s u ccessfu l ?

1 84 . E Q U A L I T Y R UB BE R C O M P A N Y —
B LA N K E T
T R AD E M A R K
T h e E q u a lity R u bb e r C o m p a ny h as r e ce ntly b ee n
o rga ni z e d with a ca p it a li z a ti o n o f to manu
fa ct u r e a u to m o bil e t ir e s a n d o th e r ru bb e r p r o d u c ts .

T h e c om pa ny h as m a d e a rr a n gem e nts whi ch ass u r e it

o f a n a d eq u a t e s u pp ly o f r a w m a t e ri a l a n d h as c o m

m e n ced th e c o nstr u c ti o n o f its m a n u fa ct u rin g p l a nts .

I t h as n o t ye t, h o we v er , d e t e rm in ed u p o n its bran d
po li cy .
276 MA RK E TIN G PR OBL E M S
Is it p r ob abl e
th a t the E qu ality R u bb e r C o m p a ny
will fin d it a d va nt ageou s to ad op t a s in gle tra d ema rk
fo r all its p ro d u cts ?

1 85 . V I R G I N I A ST O V E C O M P A NY SE LE C TI O N
—
AND

R E G I STR A T I O N O F T R A D E M A R K -

T he Vir gini a St o v e C om p any h as b een e n gage d for

tw e nty fiv e y ears in th e m a nu fact u r e o f st o v es a n d
-

r a n ges T h e com p any s p r o du cts whi ch h av e b ee n

.
’
,

s o l d in Vir gini a a n d n ei ghb o rin g st a t es h av e b o rn e th e ,

n am e p l a t e o f t h e c om p any as a tra d e m a rk Thi

- -
.

c om p a ny r ece ntly h a s d e ci d e d to e n gage in th e m a n u

fa ct u re o f e l e ctri c st o v e s h eat ers a n d ir ons O n e o f

, ,
.

th e p r o bl em s is th e s e l e cti o n o f a tr a d e m a rk fo r th es e -

n ew p ro d u cts .

Wh at p o int s m u st b e co nsi de r ed in m ak in g th e
s l ecti o n o f a tr ade m ark ? Wh at b e n efit s wou l d a ccru e
e 1 -

fr om h avin g it regist ered?

1
P C h e rin gt on , A dverti si ng as a Bus i nes s Force, p 33 1- 378
T
g
. . . .

E d war d S R oge rs Good Will, T rade-M a r ks , a n d Unj i r T radi ng

. .

J H C ar ri es , T hi n gs O ft en Mis u n d erst oo d i n C o n n ec t i o n Wi t h
.
“
. .

Tr ad e M ar k s , P r i nter s I n k, July 1 0, 1 9 1 5, pp 4 7 56 R W Jo hns o n

- ” ’ -

P ri nter s I n k, A pri l
. . . .

“
Wh y Sh o uld a B ad e M ark b e
"
-
’

29 , 1 920, p p 60 6 5 — A B R e mi ck ,
. . .
“
. Wh y T rad e~M arks Should be
R e gist e r ed , P ri n ter s I n k , M a y 1 8 , 1 9 1 6, p p 1 1 1 — 1 1 4
” ’
. .
 B RAN D S TRA D E M ARK S A D VE RTI SIN G
,
-
, 27 7

1 86 . N A R R A GA N SE TT WH O L E S A L E G R O C E R Y C O M P A N Y
—
M E T H O D O F A C C O U N T I N G F O R AD V E R T I S I N G
E X P E N D I T UR E S
I n th e Syst em o f O p er atin g A ccou n ts for Wh o l e
s a l e G ro ce rs p u blish e d by th e H a r v ar d B u r eau o f
B u sin e ss R es ea r ch , th e f o ll o win g st a t em ent is m a d e
e a d
r g r in g int r st
e e o n t h e n e t inv e st m e nt in t h e b u sin e ss zl

E very b u si n e ss sho u l d yi el d t h e own er i n t er e s t at a f air

r a t e on t h e ca pit a l i n ve st ed Thi s i n t ere s t char ge s ho u l d b e
.

r eck o n e d as o n e o f t h e it em s o f e x pen s e .

T h e d e b it s t o t hi s a cco u n t ( i n t e r e s t o n ca pit al -o wn ed ) ,
m a d e a t i n ve n t o r y ti m e , a r e f o r i n t er e s t o n t h e n e t i n ve s t
m ent in t angi b l e pro pe rty in t he wh ole s ale bu s i n e ss , e x cl u s ive
o f r ea lty Th e r at e o f i n t er e s t i s t h at r e ceive d o n r eas o n ably
.

s e cu re , l o n g t erm i n ve s t m en t in t h e s ecti o n w h ere t h e b u s i

-

ne ss i s lo cat ed T h e n et in ve s t m en t o n whi ch in t ere s t i s

.

char ge d e x cl u d e s o w n e d r e a lty , b e ca u s e t h e c h a r ge f o r r ea lty

is in cl u d ed in R en t B e s i d e s r e alty, n et in ve s t m en t a ls o
.

e x cl u d e s go o d wi ll in a n y f o r m
-
O r d i n a r i ly t he n et i n ve s t
.

m ent in a wh o l e s al e gr o ce ry b u s in e ss , o n whi ch i n t er e s t i s
c h a r ge d , is t h e d i ff er en ce b e t w ee n t h e s u m o f t h e a ss e t s

ca s h , m e r ch an d i s e o n h a n d a n d e q u i p m e n t a t d e pr e ci at e d
val u e, n ot es a n d a cco u nt s r e ce ivab le , a n d p r e paym e n t s
( s u ch a s pr e pai d i n s u r a n ce ) , a n d t he s u m o f t he li a b i liti es
no t e s an d a cco u n t s p ayab l e a n d a ccr u e d it e m s .

I f t h e b u s i n e s s i s in co r po r at ed , t h e m et h o d o f d e t er m ini n g
t h e n e t inve s t m e n t i s t h e s a m e St o ck , a u t ho riz ed o r i s s u ed ,
.

i s e x cl u de d f o r it h as n o effect on t h e n et i n ve stm en t o f t he
b u s in e s s .

Thi s a cco u n t is cre d it ed wit h i n t ere s t r e ceive d o n b ank

b al a n ce s a n d i n t er e s t co l le ct e d o n o ver d u e a cco u n t s ; p r e fer
a b ly t h e s e it e m s a r e k e pt s e p a r a t e d u rin g t h e p e r i o d a n d
cl o s e d i n t o t h i s a cco u n t a t i n v e n t o ry ti m e . I f i n t er e s t o n
o v e r d u e a cco u n t s i s a dd e d t o c u s t o m er s i n v o i ce s , t h e
’

a m o u n t c o lle ct e d i s c r e d it e d h e r e a n d n o t i n clu d e d in N e t
Sal e s T h e b a la n ce o f t hi s a cco u n t i s t h e e n t r y o n t h e Pr o fit
.

an d L o s s St at e m en t f o r e x p e n s e f o r i n t e r e s t o n ca p it a l o w ne d .

All d e b it s t o t hi s a c co u n t a r e a t t h e s am e ti m e cr e d its t o
I n t ere s t an d R en tals E arn e d .

this st a t em e nt b e m o d ifi ed t o in cl u d e in th e
Sh o u l d
inv es t m e nt a n y e x p e n d it u r e f o r a d v ertisin g?
T ak e th e N a rr a ga ns e tt Wh o l e s al e G r o c er y C o m
p any fo r e x a m p l e whi ch s p e n d s a b o u t
,
e ach

1
Bur e a u o f Bus in es s R es e ar ch , H a rv ar d Uni v e rs it y , B ulle ti n
No . 8 , S ys tem of Op er ati n g A ccou n ts f or Whole s a le Grocers , p 2 1 . .
 27 8 MARK E TIN G PR OBLE M S
y ear at th e p r es e nt ti m e in ad
v e rt isin g its s pec i alti es
“ ”
an d in d ea l e r h e l p s . T h e a nn u a l s a l e s o f th e com
p a ny a r e a b o u t
Wh a t s p e cifi c p o rti o n if a n y o f this e xp e n d it u r e
, ,

fo r a d v e rtisin g sh ou l d b e in cl u d e d in th e inv e st m ent

o f t h e N a rr agan s e tt Wh o l es al e G r o ce ry C o m p a ny ? 1

Th e foll o win g t
edi orial swere p u blis h e d i n P ri n ter s I n k
1 ’

Sal es r acti ces i n t h e a u t o m ob il e b usi n ess d o n ot v ar y m uch

p
.

3 ar e f e w . Se lli n g car s is a q u es t io n o f fin di n g pr os pec ts

a n d go in g a f t e r t hem i n p er s o n Aft e r t he goo d n ess o f t h e c ar , a n d t h e
.

goo d n ess o f t h e ad v e rt isi n g, it is a q u es t io n o f o r ga niz at io n , s al es

pe rs o nn el , s al es m an age m e n t An d s o t h e st im ula t io n , a n d , b e tt e r
.

s t ill, t h e perm an e n t i n vi gor a t ion o f t h e fo r ce , is a n im port a n t aeco m

plis h“ m e nt .

T h e t h eo ry a n d its a pplicat io ns ar e r e fl e c te d in t h e r es ul ts .

The la tt er s h o w h o w far t h e m a n agem e n t ar e t h e o r ist s a n d n o t hi n g

m o r e I t is in t er es ti n g t o lear n , as we d o f r o m a st o ck c ir c ula r t hr ou gh
.

whi ch t h e C h alm e rs M o t o r C o m pa n y as k s f r es h ca pit al ,

t h at th e o r igi nal i n v est m e n t i n t he b usin es s w as a n d t h at all
‘

o f its pr es e n t t a n gi b le a ss e ts o f wi t h t h e e xce pt i o n o f
t he p’ re ferr e d st ock , h av e be e n a cq uir e d e n t ir ely o ut o f
s ur pl us e ar ni n gs .

I t is i n t e r es t in g i n t his r e gar d t o ob s erv e t he e xpe rien ce o f t h e

“

N a t io n al Bis c ui t C o m pan y, al s o a lar ge a d v e rt iser T h e la tt er is

.

s aid , i n a m ark et r e po rt , n ev er t o h av e iss ue d a n y s ec urit ies t o fi na n ce

its gr o wt h s in ce its o r ga ni z at io n T h e b us i n ess , o n t h e c o n tr ar y, h as
.

bee n so s u ccess f ul t h a t it h as b ee n t h ou gh t wis e , a cc o r di n g t o t h e s am e

r e po rt , t o let a lar ge am o un t o f its e arni n gs go i n t o pr o pe rt y o r m is
c ella n e o us e q ui t ies a n d n o t h av e t h e m s h o w u p i n t h e i n c o m e a cc ou n t .

I n view o f t he lar ge art p laye d b y a d v e rt is in g, p a te n ts , tr ad e

“

p
m arks , go od will a n d o t h e r k e c laims o n po pul ar e st e em i n p r o m o t in g
°

t h es e t wo c o nce r ns t h e u ni n fo rm ed w ould loo k wi t h i n t e r est to see t h e

v a l u at i o n s et d o w n agai n st t h es e i n t h e ge n e r al b al a n ce .

T h e r es ult m igh t be m yst ifyi n g He w oul d fi n d t h a t t h e C h alm e rs

“
.

C om pan y s umm e d t h es e all u p a t j ust $ 1 , d es pit e t h e fac t t h a t t h e y

h av e a bo ok v al u e o f m o r e t h a n a n d a n e t t a n gi b le v a l ue
a c c or di n g t o a n a p pr ai s al c o m p an y o f m o r e t h an
N 0 n o t ice wh a t ev e r is t ak e n o f goo d will , ad v e rt is i n g, b r a n ds , e t c ,
“
.

in t he N at io n al Bis c ui t p u b lis h e d b al an ce .

T hi s e xcess o f m o d esty m a y be a n d pe r h aps is goo d

“
r ac t i ce
fr o m a b a nki n g po in t o f vi e w , b u t it is ad v e rt is in g s mis fo rt un e ,
’
a us e
it mi nim iz es o r ign or es a d v e rtis in g s p ar t i n t h e s u c ce ss o f t h e i nst it u t io n
’
.

T he pr a ct i ce o f a n ot h e r i n d us tr ial c o n cer n a n d lar ge a d ve rt is er ,

“
 B RAN D S TRA DE MARK S A DVE RTI SIN G ,
-
, 27 9

t he Agr ic ul t ur al C h e mic al C o m pa n y is di ff er e n t I ts pat en ts b r an ds , .

, ,

tr ad e m ar k s et c ar e v al u ed at s om e
-
,
.
, Says T r eas u r er
Th om as A D oe i n a le tt e r t o P ri n te r s I n k :
’
.

T he fi gu re s ar e n o t t he r es ult o f an e xac t o r s c ie n t ifi c b as is o f
‘

est im a t e b u t o r i i n all y r e r es e n t e d t he ac t u al c o st t o t hi s c o m an y
, g p p
r e pr ese n t e d pr a cti cally e n t i r e ly b y c om m o n st o ck Fr o m t h e o r i gi n al .

a m oun t at w hi ch t h e s e ass ets w e r e c ar r ied ar b itr a r y r e d u c t io n s h a v e

bee n m a de as t h e b usin ess o r c o n di t i o n s w a rr an t e d T he s e as s e ts .
,

alt h ou gh i n t a n gi b le h ad a n d h av e i n tr i ns ic v al u e
, N e v e rt h e less it h as .
,

b ee n t he p o li cy o f t h e c o m pa n y t o r e d u ce t he am ou n t f r o m t im e to
t im e wh en fou n d ad vis a b le .
’

Th e r e m ay be s o m e di ffi c ult y i n ar r iv i n g at de fi ni te fi gur es i n
iv e n c as e b u t it w o u ld un q u est io n a b ly b e be tt e r fo r ad v e r t is i n g
ay n g ,

1 f 1 t we r e d o n e P ri n te r s I n k Se pt e m be r 1 8 1 9 1 3
’
p 83 84
T he c o llar a n d s hi rt b us i n e ss o f C l u e tt P e a b o d y 5 C o is o n e o f
-
. .
, , ,
“
, .

t he lar ge st if no t t h e lar gest i h t he w o r ld

—
I ts pr o fits fo r t he las t
—
.

fo u r year s are c e rt ifie d t o b e as fo llo ws

1 9 09
1 9 10
19 1 1
19 12
Thes e in t e r est in g fi g ur es o f a n o t ab le i n d ustri al s u ccess co m e
ou t in co n n ectio n wi t h t he t ur ni n g o f t he co m pan y in t o an
c o r po r at i o n a n d t he fa mi li a r pr oce d ur e o f s e lli n g pr e fe rr e d st o ck to
t h e p u b li c I t is o b vi ous t h at a v e r y lar ge pr o p o rt i o n o f t he as s e ts
.

agai n st w hi ch t hi s h e a vy fl o t at i o n is m a de c o ns ists o f w ha t is k n o wn

goo d will Just h o w lar ge t he pr o po rt io n is t he c o m pan y h as n o t

‘ ’
as .

see n fit t o dec‘lar e , for t’ he b al a n ce shee t pr es e n t e d t o pr os pe ct iv e in

v es t o rs s h o ws goo d wi ll l u m pe d i n wi t h v ar ious o t h e r it e m s as f o ll o ws :
R e al est a t e , b ui ldi n gs , m achi n e ry a n d eq ui pm e n t a t fi o y ,
‘

R o chest e r a n d C o r in t h , N Y ; Sou t h N o rw alk , C o n n , a n d Le o m i nst er ,

. . .

M as s ; t o ge t he r wi t h goo d will , pat e n t r ights , tr a de- n am e , e t c , .

T h e r e as o ns t h e co m p a n y did n o t ch oos e t o it e mi z e s e par at e ly

“

its v e ry im ort an t it e m o f goo d wi ll ar e le f t t o i n f e r e n c e C e rt ai nly

‘ ’
.

t he re is n ot n g ab ou t it t o b e as ham e d o f , for i t in di cat es a n ab le a n d

°

a ggr ess iv e m a n a ge m e n t T h e r e h as , h o w e v e r be e n a t e n d e n c y i n
Wall Str ee t cir cles t o c r it icis e r e c e n t i n d ustr ial fl o t at io ns , wh e r e t he
.

go o d will w as h eav ily ca pit al i z ed , s u ch as , fo r e xam ple , t he

of 0 0 d wi ll i n t h e Woo lw o rt h C o m pa n y , a n d t h e o f goo d
I
wi l in t h e B F G oo dr ich c o m p a n y Ba nk e rs , fi n a n c ie rs a n d e c o n o m i sts
. . .

o f c ours e r ec o g ni z e t h at t h e r e is s u c h a t hi n g as g ood wi ll a n d t h a t it
fr eq u e n t ly h as e n o r m ou s cas h v al u e Ye t w h e n t h e y e n cou n t e r it i n
.

a b al a n ce s h ee t , t h e ir di s po s i t io n is t o t hr o w it ou t N o w t his wh o le
‘ ’
.

s ub j’ ec t i n t er ests P ri nter s I n k c o ns tit u e n cy i n t e ns e ly , b e ca u s e goo d

’ ‘

will is t he ac c u m ul a t e d r es ult o f i n t e llige n t ad v e rt i s i n g T h a t t he .

C luett , P eabo dy b us in ess h as b ee n a b ly ad v e r t is e d is s u ffic ie n t ly

sh o wn b y t he im press iv e fig ur es o f e ar ni n gs pr i nt e d a t t h e hea d o f
t his ar t icle T he di re ct t e s t im o n y o f P r es id e n t F F Pe ab o d y o n t his
. . .

o in t , will b e ge n er al ly ac c e pt ed as c o ns e r v at iv e a n d well Wi t hi n t he
ac s t . He s ays :
T he Ar r w o
Br a n d is a fam ili ar o n e in ev e ry h s e h ld ;
“
ou o
oo o
fr o m s ch l bo y a n d c lle ge m a n t e ld e r ly m e n i n e v e r y p r fess i n o o o .

o
I t is W e ll a n d f av r ab ly k n w n , be c a s e o f t he e n r m o s am n t o f u o ou ou
o
m ney t h a t h as b ee n e x pe n d e d i n pr es e n t i n g i t t t h e p b li c c n t i n o u o u
o u s ly for t he pas t s ixt ee n ye ars
’
P r i nte rs I n k , Fe br ar y 27 , 1 9 1 3 ,
’
. u
p 96
. .
280 MARK E TI N G PR O BL E M S
1 87 . A LB A T R O S S P A P E R C O M P A N Y —
B R AN D
D E VE L O P M E N T
T he Alb a tro ss P a p e r C om p a ny m an uf a ct u r e s b o n d
p pa e r a n d l ed ge r p a p e r o n a l a r ge s ca l e I ts o u t p u t is .

s o l d e ntir e ly to j o bb ers wh o in t u rn s e ll to p rint ers a n d

o th e r u s e rs o f t his kin d o f p a p e r s uc h a s bl a nk b o o k -
,

m a n u fac t u r ers Ab ou t 4 0% o f t h e m ill s o u t p u t is ’

.

s o l d u n d e r t h e m ill s wa t er m a rk ; t h e r em a in d e r is s o l d
’

’
u n d e r j o bb e rs m a rks Alt o ge th e r s e v er a l h u n dr ed
.

m a rks a r e p l a ce d u p o n th e p ap er th a t this c o m p a ny
m a nu fa c t u r es .

E a ch j o bb e r m ay u s e s e v e r a l m arks for t h e d iff er e nt

gr a d e s a n d w e i ghts o f p a p er T h e p ap e r b earin g an y
.

o n e m a rk o f a j o bb e r m a y b e m a d e in co m p e tin g m ills .

This e n able s a j o bb er to s e cu r e p ri ce a d va nt age s e v en ,

if h e d oes n o t n egl ec t qu ality T h e Alb a tro ss P ap e r .

C o m p a ny s e lls t o a b ou t tw o h u n d r e d j o bb e rs .

Fr o m th e p r o d u cti o n st a n d p o int th e d iv e rsity o f

m arks is u n e co n om i ca l While th e d an d y r o lls by
.
,

m ea ns o f whi ch t h e w a t e r m a rk is im p rin t e d in th e
p ap e r a r e b e in g ch a n ged a m achin e ca nn o t p r o du ce
, ,
”
s a l abl e pap er This is th e n e ck o f th e b o ttl e a n d
.

sl o ws u p th e e ntir e p l ant Fo r each m ark a d iff er e nt

.

d a n d y r o ll is u s e d .

I f p r o d u cti o n w ere co n c e ntra t e d o n th e m ill s o wn ’

w at er m arks fur th e rm o re it w ou l d b e p o ssibl e t o s ecur e

, ,

l o n ge r ru ns o n a few siz e s a n d w e i ghts Th e j o bb e rs .

’

b u sin ess inv o lv e s n ot o nly d iff er ent m arks b u t a ls o ,

a l a rge v a ri e ty o f siz e s a n d w e i ghts o f p ap er I t is .

e stim a t e d th a t if th e p r o du cti o n co u l d b e co n ee n
,

tr a t e d o n th e m ill s o w n m arks th e r e w ou l d b e a
’

s avin g o f a t l e ast 1 0% in m a nu fa ct u rin g c o sts .

T h e A lb atr o ss P a p e r C om p a ny th u s h a s a n in centiv e
fro m th e p r od u cti o n st a n dp o int t o d e v e l op its o w n
m arks m o r e e xt ensiv e ly u nl ess th e o bst acl es r e n d er
,

s u ch a p o li cy i m p r acti ca l .

O n e o f th e l ar ge com p e tit o rs o f th e Alb atr o ss P a p er

C o m p a ny is th e C o mm o d o r e M a nu f a ctu rin g C o m p a ny ,

whi ch p r o du ce s a l o w e r gr ad e o f s u lp hit e b o n d T h e .

C o m m o d o r e M a n u fa ct u r in g C o m p any h a s e st ablis h ed
its o w n m ark I t d id this by a d vertisin g its m ark th u s
.
,
 BR AN D S TRA D E M ARK S A D VE RTI SIN G
, ,
28 1

gr a d u a lly b u il d in g d e m a n d whi ch fin a lly s uffi ce d

up a

t o co v e r th e e ntir e
’
o u t p u t o f t h e c o m p a ny s m ill T he .

C o mm o d o r e M a n u f a ct u rin g C o m p a ny e n cou nt e r e d
s e ri o u s o pp ositi o n fr o m th e j o bb ers wh e n it e li m in a t e d
’
j o bb ers m a rks So m e o f th e j o bb ers a t first r e fu s e d t o
.

s e ll its p a p e r N o w its o u t pu t is d istrib u t e d e ntir e ly

.

t h r o u gh j obb ers with o u t a n y syst e m o f e x cl u siv e

a ge n ci e s . T h e C o m m o d o r e M a n u f a ct u rin g C o m p a ny
d o m in a te s th e m a rk e t f o r its gr a d e o f b o n d p a p e r .

So m e p a p e r m i lls hith e rt o h a v e u n d e rt a k e n t o s e ll
th eir p r o d u cts d ir e ct to wh o le s a l e c o ns u m e rs I mm e .

d ia tely a ll th e p a p e r j o bb ers in t h e Unit e d St at es h av e

r e f u s e d t o h a n d le th e p r o d u cts o f th es e m ills Th es e .

e x p e ri m ents h a v e in d i ca t e d th a t it is n o t p r o fit abl e t o

e st a blish wh o l e s a l e br a n ch e s t o s e ll t h e o u t p u t o f o n e

p ap e r m a n u fact u r e r E a ch j o bb e r s e lls a ll kin d s o f

.

p a p e r , in cl u d in g n o t o nly b o n d a n d l e d ge r p ap e r , b u t
a ls o b o o k p a p e r , co a t e d p a p e r , wr a pp in g p a p e r , a n d

n u m e r o u s o th er v ari eti e s T h e j o bb e r s gr o ss p r o fit is
.
’

20% to 25% o f his s e llin g p ri ce T h e j o bb e r c a rri e s a

.

st o ck a n d his s al e s m e n co v e r a l ar ge t errit o ry H is .

e x p e ns e s a r e s o hi gh th a t th e r e is n o r e a s o n f o r b e li e vin g

th at th e j o bb e r is r e ce iving a n abn o r m ally l ar ge n e t

p r o fit . T h e t e rm s o n whi ch p a p e r is s o l d by t h e m ills
to th e j o bb ers a re 3 % thirty d ays , n e t sixty d ays .

All th e j o bb ers h av e th e ir o w n m arks o n e v e ry

gra d e o f p ap e r th a t th e y s e ll T h e l ar gest m ark e t fo r
.

p a p e r , s u ch a s th e Alb a tr o ss P a p e r C o m p a ny m a n u
fa ct u r es , is in th e l a rge citi es , b u t s u bst a nti a l q u a ntiti e s
are s o l d in t h e s m a ll e r c iti e s a n d t o wns C o ns e q u e ntly
.

wi d e d istrib u ti o n is e ss e nti al .

M o st o f th e c o m p e tit o rs o f th e A lb a tro ss P a p e r
C o m p a ny a r e m a n u fa ct u rin g o nly j o bb e rs m arks
’
.

T h e Alb a tr o ss P a p e r C o m pa ny h a s b ee n a d v e r
tis in g its m a rk in th e Sa t u r d a y E v e nin g P o s t a n d
si m il ar m ed i u m s I ts s a l e s h a v e b e e n in cr easin g
.

gr a d u a lly Until r ece ntly two o f th e l a r ges t j o bb ers

.

in th e Unit e d St a t e s h a v e r e f u s ed t o c a rry t h e A lb a tro ss

m a rk . At th e p r e s e nt
ti m e o nly o n e j o bb e r in a t o wn
is s e llin g p a p e r b ea rin g th e Alb a tr o ss m a rk Je bb e rs .

still r ef u se to h a n d l e it u nl ess giv e n e x cl u siv e a ge n ci es .

282 MARK E TIN G PR OBL E M S
T he Alb a tr oss P ap e r C o m pa ny ca nn o t af fo r d t o
m ak e a n y h e a vy in cr ea s e in its a d v e rtisin g ap p r o p ri a
tio n a t th e p re s ent tim e T h e a d verti s in g a pp r o p ria ti o n
.

fo r th e cu rr e nt y ea r is I f th e j obb ers m arks ’

w e re to b e thro wn o u t s u dd e nly by th e Al b a tr o ss
P ap er C om p a ny th e co m p a ny w ou l d n o t b e abl e t o
,

k eep its p l ant in f u ll op era ti o n .

Sh ou l d th e A lb a tr o ss P a p er C om p a ny s e ek t o
d ev el op f u rth e r its o wn m arks ? I f i t is t o d e v el o p its
o wn m arks wh a t p o li cy sh ou l d it a d o p t f or a d v e rtisin g
,

an d distrib u ti o n ?

1 88 . SA R A N A C FO U N T A I N P E N C O M P A N Y —
R E LA T I O N
o r AD V E R T I S I N G T o SA L E S

T h e Sa r a n ac Fou nt a in P en C o m p a ny fo r s om e
yea rs sp eci aliz ed in th e p ro du cti o n o f f o u nt ai n p e ns t o
b e s o l d a t a r et a il p ri ce o f Th e s e p e ns w er e
wi d ely a d v ertis ed , an d th e p ri ce was a co nsp i cu ou s
fea t u r e o f a ll th e a d v e rt isin g T h e co m p a ny st at ed
.

th a t its s p e cia liza ti o n e n abl ed it t o p ro du ce a p en o f

go o d q u a lity f o r s a l e a t this p ri ce . T h e p r o d u ct , th e r e
fo re , w a s s o l d o n p ri ce , b u t it h a d m erit .

Sev e r a l y ears a go , th e Sa r a n a c Fo u nt a in P e n C o m
pa ny d eci d e d to a dd tw o n ew lin e s o f p ens , o f b e tt e r
q u ality , to b e s o l d u nd er th e s am e n am e T h e p ri ce s
.

for th es e n ew gr a d es w er e an d

O n e o f th e m a in o b j e cts o f t h e com p a ny in o ff er in g
th es e n ew gra d e s o f p ens was t o s ecu r e a l arge r v o l um e
o f b u s in e ss f o r th e ir s a l esm en . Ab ou t o n e- h a lf o f th e
t im e of th e s al esm e n w as sp ent a ctu a ll y in s e llin g an d
th e r em a in d e r in tr a v e lin g . I f a l ar ge r v o l u m e o f
o r d ers cou l d b e s ecu r e d d ur in g th e ti m e th a t th e m en
 BRAN DS TRA DE MA RK S A D VE RTI SIN G
,
-
, 283

wer e e n ga ged a ct u a lly in s el lin g it w o u ld m ea n a s u b

,

s t an tia l r e d u cti o n in sa le s f o r ce e xp ens e .

Wh en th e s e n ew gra d es o f p e ns w e re o ff er e d th e y ,

w e r e ad v e rt is ed wi d e ly b u t th er e w as n o d i m in u ti o n
,

in th e ad ve rtis in g o f th e p e ns s o l d a t R e t a il
d ea l ers p l a ce d l a r ge o r d ers f o r t h e an d

gr a d e s o f p e ns d ur in g th e fi rs t y ea r . Th es e p e ns s o l d
sl owly h o we v e r in th e r e t a il st o r e s a n d th e v o l u m e
, , ,

o f r ep ea t o r d e rs d u rin g t h e n e xt t w o y e a rs w as s m a ll .

N o co m p l a ints o f a n y co nse qu en ce w e r e r ep o rt ed t o
th e co m p a ny fr o m t h e tr a d e Th e r e f o r e th e c o m p a ny
.
,

a ss u m e d th a t th er e w as n o d iss a tisfa c ti o n with t h e

q u a lity o f th e p r o d u ct .

D ur in g t h e first y ea r a ft e r th e n ew gr ad es o f p e ns
w e re o ff e re d fo r s a l e th e s a l e s o f t h e
, p ens in
c r ea s e d in th e s e co n d y e a r th e s e s a l e s in cr e as e d
a n d in t h e th ird y e a r

Wh a t p r o b ably w e r e t h e c a u s e s th at p r o d u ced th es e
res u lts in the sale s o f Sar an ac p ens ?

18 9 . C O H ASSE T M A N U FA C T UR I N G C O M P AN Y
SA LE s P L A N
T h e C o h a sse t M a n u fa c t u rin g C o m p a ny h as a p l a nt
fo r w o o d w o rkin g
-
This p l a nt is l o ca t e d in a m a n u
.

fa ctu r in g c ity in E as t e rn M ass a ch u s e tts I n a s m u ch

.

as th e b u s in e ss o f this c o m p a ny h a d n o t b e e n s u ffi ci e ntly

p r o fit a bl e ,
t h e co m p a ny d e c i d e d in D e ce m b e r , 19 19 ,

to u n d e rt a k e t h e m a n u fa c t u r e a n d s a l e o f a n ew c l ass
o f p r o d u cts Th es e p r o d u c ts w e r e p o r ch tr ellis e s , gar
.

d en tr e llis e s , ar t f e n ce s , a n d o th e r ga r d e n s p eci alti es .

T h e com p any int e n d e d t o st a rt with fiv e a rti cl es .

Th es e in cl u d e thre e si z e s o f ga rd en tr ellis es to s el l a t
$ 5 , $ 1 0 , a n d $ 1 5 e a ch , o n e d e si gn o f p or ch tr ellis t o
b e u s ed fo r tr a ilin g vin e s , a n d o n e o th e r a rti cl e All.
284 MARK E TIN G PR O BL E M S
th e s e a rti cl e s w e re t o b e d esi gn e d with a vi ew to b eau ty ,

to b e b u ilt O f hi gh gr ad e m a t e ri a ls with fir s t cl a ss
- -

w o rk m anship Th ey w ere t o b e paint ed with th e b e st

.

whit e p a int a v a il abl e .

T h e C o h ass et M a n u fa ctu rin g C o m p any p r op o s ed

t o s e ll th es e a rti cl e s by s e n d in g s o li cito rs fr om h o u s e
to h ou s e t o c a nva ss f o r o r d ers . T h e co m pa ny was o f
th e O p ini o n th a t s a l e s cou l d b e m a d e m o st e ff ectiv ely
a t th e h o m e s o f th e p o t e nti a l cu st o m e rs . I n th e s e co n d
s eas o n th e c om p a ny p l ann e d to d o s o m e a d v e rtisin g ,

b u t it h a d n o t d e ci d e d at th e o u ts e t wh e th er t o u s e
d ir ect m a il a d v ertisin g o r m aga zin e a d v e rt isin g .

I n o r d e r fo r th e b u sin ess t o sh o w a p r o fit it w as ,

e stim a t ed th a t it w o u l d b e n e ce ss a ry t o s e ll fr o m 7 5 t o

1 00 arti cl e s e ach d ay . I t was e stim a t ed fur th e rm o r e

, ,

th a t this w o u l d r e quir e fr o m ten to fift ee n s o lic it o rs .

I t w as p l ann ed t o p ay 20% c om m issi o n t o th e s o li ci to rs .

T h e com p a ny was s m a ll an d t h e p ro p ri e t o rs h a d a
go o d u n d e rst a n d in g o f a ll w o o d w o rki n g m e th o d s
-
.

Th ey h a d a ra ilr o a d si d ing a t th e p l a nt a n d a goo d

l ab o r s u p p ly
.

T h e c om p a ny h ad su ffi ci e nt cap ita l in D ecem b er

, ,

1 9 1 9 t o o bt a in t h e n e ce ss a ry m a chin e ry an d t o fur nish

,

th e fu n d s f o r p ur ch a s in g l um b e r an d p ayin g o p er a tin g
e xp e ns e s f or p erh ap s t w o m o nths ,
b eginn i n g m anu
factu r in g op e ra ti o ns th e first o f J a nu a ry T h e cap it a l
.

was n o t s u ffi ci e nt t o w a rr a nt s en d in g ou t s a l ar i ed
s a lesm e n with o u t gu ar ant ee d s a l e s . T h e cap it a l o f
th e c om p an y wo u l d h a v e b e en se ri o u sly d ep l e t e d if it ,

h ad s ent o u t tw o hi gh p ri ced s a l e sm e n o n a s a l ary

-

b a sis wh o w e r e n ot s u cce ssfu l in o bt a ini n g o rd e rs .

I t w as p r op o s e d t o s e n d r ep res e nt a t iv e s o f th e
co m p a ny int o a t o w n t o s o li c it o rd e rs a n d th e n fo r

t o wns within 1 00 m i l e s o f th e p l a nt to m a k e d elive ri e s

with a li ght tr u ck T o t o wns a t a gr e at e r d ist a n ce it
.
,

was p r op o s ed to m ak e b u lk shi p m e nts th a t w o u l d b e

d istrib u t ed by a tru ck t o b e h ir e d in th e t o wn Wh en .

e v e r o nly a f ew s a l e s w e r e m a d e in o n e t o w n in d ivi d u a l
,

shipm ents w er e to b e m a d e d ir e c t t o th e b u ye rs A .

ri gi d p o li cy wa s t o b e e st a b lish ed f o r co llectio n u p o n
d e liv e ry
.
 B RAN D S TRA DE MARK S A D VE RTI SIN G
,
-
, 28 5

T h e p r e si d e nt of th e ny st a t ed : We d o n o t
co m p a

fee l th at w e c an a ff or d a d ve rtis in g th e first y ea r u nl e ss ,

o ur e ffo rts a t t h e O p e nin g o f th e s e a s o n m ee t with

e n o u gh s u cce ss t o s u pp ly t h e n e ce ssa ry f u n d s I n thi s

.

ca s e w e w ou l d st a rt with th e S a tu r da y E ven i n g P os t ,

b u t w o u l d w a nt p l e nty o f st o ck o n h an d in o r d er th a t
w e m i ght n o t l o s e a n y b e n e fits th a t m i ght c o m e fr o m
ou r a d v e rtisin g We a r e m u ch in d ou bt h o w e v er a s
.
, ,

to wh e th e r m a ga zin e o r d ir e ct m a il a d v ertisin g w o u l d
”
b e o u r b e st m e d i u m .

T h e co m p a ny i nt e n d e d t o p r o d u ce a n a rti cl e o f
hi gh m erit T h e p ri ce ch a rge d w as t o b e s u ffi ci ent t o
.

p e r m it th e us e o f fi r s t c l a ss m -
a t e ri a ls a n d fir s t q u a lity -

w o rk m anshi p T h e com p a ny ex p e ct e d th a t its m a n u

.

fa ctu r in g a n d d e liv e ry c o sts w o u l d b e a b o u t p er

arti cl e its s elli n g co st
, p er a rti cl e a n d s e llin g
,

p ri c e This p r i ce w o u l d b e f u lly a s lo w o r l o w e r

th a n th e p ri ce f or whi ch th e s am e a rti cl e co u l d b e m a d e
in a ca rp e nt e r s sh op I t w a s ex p e ct e d th a t th e s a l e s
’
.

w ou l d b e m ad e chiefly t o th e m i dd l e a n d w ealthy cla ss

O f cu st o m e rs w h o co u l d a ff o r d t o p u r ch a s e s u ch a rt i c l e s

a t this p ri ce A s a n a cco mm o da ti o n th e co m p any a ls o

.
,

p l a nn e d t o un d e rt a k e t o d e si gn a n d m a n u f a c t u r e s p e c i al
a rt i cl es b u t its e ff o rts w e r e t o b e c o n ce ntr a t e d m a inly
,

on th e st a n d ar d iz e d lin e s .

W er e th e s a l e s p l a ns o f this co m p ny s n a o u d ? Wh a t
m o d ifi cati o ns if an y sh o u l d h a v e b ee n r e co mm e n d ed
, ,
?

1 90 . HE MAT I TE C O N V E Y O R C O M P A N Y —
A DV E R T I S I N G
P LA N S
T h e H em a tit e C o nv e y o r C o m p a n y is o n e o f t h e
la rge m a n u fa c t u rers o f h o ists an d co nv e y o rs fo r in d u s
tri al an d m er ca ntile p l ants T h e p ro d u c ts o f th e c o m
.
286 MARK E TIN G PR OB LE M S

p a ny p a t e nt e d a n d a r e a d ap t a bl e t o
are wi de ly v arying
r e qu ire m e nts T h e com p any o p e ra t e s
. fo u rt ee n s a l e s
bran ch e s a n d s ervi ce st ati o ns T h e s e rvi ce d ep a rt m ent
.

a d vis e s p r o sp e c tiv e cu st o m e rs a s to t h e s o rt o f e q u i p

m e nt b e st s u it e d t o th e ir in d ivi d u a l n ee d s This s e rvi ce

.

d ep artm e nt is u n d e r th e s a l e s m a n a ge r a n d w o rks
cl o s e ly with th e s a les f or ce .

A s ep ara t e a d v e rtisin g d ep a rtm ent h a s n o t b ee n

m a int a in ed .Fo r tr a d iti o n a l r ea s o ns th e a d v e rtisin g
,

is in ch ar ge o f th e treasur e r o f th e co m p any wh o s e
o th e r d u ti e s n o w r e q u ir e th e m a j o r p o rti o n o f his

a tt e nti o n . C o nse qu ently th e a d v e rtisin g o f th e H em a

tit e C o nv e y o r C om p a ny is h a n d l e d sp a sm o d i ca lly a n d
u su a lly by su b o r d in a t e s with littl e s u p e rvi si o n .At
fr equ ent int e rva ls fo r ex am p l e a s u b o r di n at e e m p lo yee
, ,

is t o l d t o s e n d ou t a c ir cu l ar l e tt e r t o a list o f
p ro sp e ctiv e cu st o m e rs .T h e list a n d th e l e tt e r wh e n
p r ep a r e d ar e giv e n m o r e o r l e ss p e rf u n ct o ry app r o v a l
by th e e x e cu t iv e in ch arge .

A bri e f inve sti gati o n by an ou tsi d e p a rty h as in di

ca t e d th a t th e f u n d s th u s spe nt f o r a d v e rt is in g by

this com pa ny ar e yi e l d in g alm o st n o r e s u lts Wh at .

w ou l d app ea r to b e th e m o st p r acti c a l p l a n for r eor gan

izin g th e a d v e rtisin g w o rk o f th e c o m p any ? Sh o u l d
an d v e rti s in g a ge n c y b e em p l o y e d ? Wh a t ar e th e
a
chi e f p o ints t o b e p r o vi d e d f o r in p l a nnin g a system a ti c

a d v e rt isin g cam pa i gn fo r th e H em a tit e C o nv e yo r

C o m p a ny ?

19 1 . SU S QU E H AN N A M A N U FA C T UR I N G C O M P A N Y
SA L E S A N D A D V E R T I S I N G P LA N S
T he Su squ eh a nn a M a nu f a ct u rin g C o m p a ny r e
cen tly f a ce d t h e p r o bl e m o f d e c i d in g u p o n t h e r e t ail

ou tl e ts fo r a n ew p r o d u c t a n d t h e e ff ec t o f its s o l u ti o n

u p o n th e a d v e rtisin g p lan s o f th e c o m p a ny .
 B RAN DS TRA DE MA RK S A D VE RTI SIN G
,
-
, 287

Up to t h e t im e th a t thi s p r o bl em r s th e Sus qu e
a o e,

h a nn a M a n u fact ur in g C om p a ny h a d b ee n m an u fa ctur
in g t oo ls a n d si m il a r a rti cl e s s o l d in r et a il h ar d w ar e
st o r e s T h e co m p an y h a d a w ell e st ablish e d s al e s
.
-

o r gan i z a ti o n f o r s e llin g d ir e c t t o r e t a il e rs T h e p r esti ge

.

o f its p r o d u cts w as w e ll e st abli sh e d with t h e h a r d w a r e

trad e .

T h e co m p a ny d e ci d e d t o a d d a line o f s af ety r a z o rs
t o its o th e r p r o d u cts .T h e q u esti o n th e n a r o s e as to
wh eth e r th e com p a ny sh o u l d u n d e rt ak e t o h a v e its
bra n d o f s af ety ra z o rs s o l d thr o u gh r e t a il st o r es ou t
si d e o f th e h ar d w ar e tr a d e Wh a t w as to b e s a i d for
.

a n d a ga inst a p o li cy o f s eekin g r e t ail ou tl e ts o th e r

th a n h a r d w ar e st o r e s ?
T h e p r o du cts th a t th e co m p any h ad p r evi ou sly
m anu fa ctu r e d h a d b ee n a d ve rt is ed in tr a d e p ap e rs a n d
by m eans o f d isp l a ys in th e r e t a il st o r es tha t so l d th es e
arti cl e s How w o u l d it b e n ece ss a ry t o m od ify th e
.

a d v ertisin g p l a ns o f th e co m p a ny if it w e r e d e ci d ed t o
,

s ell the s a fety r a z o rs th r ou gh n ew r e t a il ch ann els as

w ell as in h ar d w ar e sto res ?

1 92 . P LY M O U T H D Y E C O M P A N Y —
A DV E R T I S I N G
M E D I UM S
T he P lym ou th D ye C om p a ny m a n u fa c t u r e s s o ap
d y es . Th es e d yes are s ui t abl e f or u s e by th e h o u s ewif e
in h er h o m e T h e c om p any a lr ead y h a s wi d e dis tr ib u
.

ti o n o f its p r o d u c t thr ou gh u nit st o re s I ts ad v e rtis in g

.

for th e c o m in g s eas o n th e r e fo r e is t o b e aim ed a t

, ,

int ensify in g th e d em an d fo r Ply m o u th d y e s in th e

n ati on a l m ark e t .
288 MARK E TIN G PR O BL E M S
Wh a t typ e s o f a d v ertisin g m e d i u m s a pp ear to b e
b est s u it e d f o r this a d v ertisin g cam p ai gn ?

1 93 . J A C K S O N M A N U FA C T U R I N G C O M P A N Y
A DV E R T I S I N G M E DI UM S
T h e J a ckso n M a nu f ac tu rin g C o m p a ny r e ce ntly h as
a dd e d e va p o ra t e d m ilk t o th e gr o u p o f f o o d p r o d u cts
th a t t h e co m p a ny m a nu f a ct u re s T h e e v a p o r at e d m ilk
.

“ ”
is t o b e kn o wn a s t h e Aj ax br an d .T h e c o m p a ny
s eeks n a ti o n a l d istrib u ti o n fo r this n ew p r o du ct I t is .

to b e d istri b u t e d t h r o u gh wh o l e s a l e rs t o u nit st o r es .

Wh a t typ e s o f a d v e rtisin g m ed iu m s ar e lik e ly t o

p r o v e s e rvi cea bl e in t h e c am p a i gn o f th i s c o m p a ny ?

1 94 . P E TR E L M O T O R C O M PAN Y —
AD V E R T I S I N G
M E D I UM S
T h e P e tr e l M o t o r C o m p a ny m a n u fa ctu r e s d et ach
a bl e m o t o rs f o r s m a ll b o a ts This co m p a ny d istrib u t es
.

its m o t o rs thro u gh r e t a il st o r e s a n d a lso fills m a il o rd e rs

fro m cu st om e rs w h o c ann o t O bt a in th e m o t o r at th e ir
l o ca l s t o r e s .

T h e P e tr e l m o t o rs h av e b ee n th o ro u ghly t este d an d
th e c o m p any is co nvin ce d th a t th e y will r e n d e r s a t is
fa ct o ry s e rv i ce T h e P e tr el M o t o r C om p a ny h as n o t
.

ad v e rtis e d ext e nsiv e ly h e r e t o fo r e T h e co m p a ny has

.
 B RAN D S TRA DE MARK S A D VE RTI SIN G
,
-
, 289

am p e l fina n c i a l r e s our ce s fo r a n a d v e rt is in g cam p a i gn ,

a go o d sa le s f o r ce a n d its f a ct o ry is e q u i p p e d t o s u p p ly
,

a l a r ge d e m a n d .

Wh a t typ e s o f a d v e rt isin g m e d i u m s sh o u l d b e giv e n

s e ri ou s c o nsi d er a ti o n in p l a nnin g th e ad ve rtisin g c am
.

p gn fo r P e tr e l m o t o rs ?
a i

1 95 . R O B I NH O O D FL O U R M I LL S —
AD V E R T I S I N G
M E D I UM S
K no x B ro wn a d v ertis in g a gen ts h a n d l e th e
, ,

a ccou nt o f th e R o binh o o d Fl o u r M ills I n o r d er t o

.

stim u l at e a d em a n d for this fl ou r i n G r eat er B o st o n a n ,

inv esti ga ti o n w as m ad e o f t h e d istrib u ti o n o f th e

p r o d u c t a n d o f th e int e nsity o f th e d em a n d in all p a rts
O f th e c ity a n d in its s u b u rbs With th e e x ce p ti o n o f
.

o n e d istri ct this inv e sti ga ti o n in d i cat e d th a t a la r ge

,

p o rti o n o f th e r e t a il gr o ce ry st o r e s c arri e d R o binh o o d

fl ou r . Th er e a ls o a pp e ar e d t o b e a str o n g d em a n d in
a ll s e cti o ns with this o n e e x cep ti o n wh e r e a s u b s t a n
, ,

ti a l d em an d m i ght b e C x p e ct ed T h e d istri c t th a t w a s
.

t h e e x cep ti o n w as in a r esi d e nti a l s e cti o n i n whi ch a

l ar ge n u m b e r o f ap art m e nt h o u s e s w e re l o ca t e d I n .

th a t d istri c t f e w st o re s h a d R o binh o o d fl o u r in st o ck
chi e fly th e y st a t e d b e ca u s e th e y r e ceiv e d fe w o r d e rs
, ,

fo r it .

Wh a t f o rm o f a d v e rtisin g p r o b a bly will p ro v e to

b e b e st a d a p t e d t o th e sti m u l ati o n O f th e d em a n d fo r
R obinh o o d fl o u r in this d istri ct ?
290 MARK E TIN G PR OBL E M S
1 96 . C HI C O P E E
H O S I E R Y C O M P A N Y A DV E R T I S I N G —

P LA N
T h e C hi co p ee H o si e ry C o m p a ny r e ce iv e d th e f o ll o w
in g l e tt er fr o m th e A tl a s Si gn C o m p a ny in O ct o b er , ,

19 19 :

O ct ob e r 1 0, 19 19 .

C h i co p ee H o s i ery C o m pany ,

B o s to n M a ss , .

G e ntl em en :
We m ake yo u t he f o llowin g pro po s al to j oin o u r m an u
f act ur ers E x cl u sive C l u b Pl an f o r s i gn d i s tri b u ti o n a n d
’
,

yo u r a ccept an ce o f this pro po s al will co ns tit u t e a con tra ct

b e twe e n u s a s f o ll o ws :
,

We agre e t o pl ace a for ce o f high grad e s ale s m en u p on

t h e ro a d t o co ve r t h e E a s te rn a n d Mi d d l e We s t ern St at e s
a s a gr e e d wh er e tr a in tr o ll ey a n d po p u l a ti o n m ak e s t h i s
, ,

pl an pr a cti cal The s e s al e s m en will re pres ent yo u in t h e

.

ca p a city o f s p e ci a lty a d verti s i n g r e pr e s ent a tive s .

Y o u ar e t o f u rn i s h u s with a list o f yo u r a gent s o r d eal er s

thro u gho u t t he co u n try s ai d list t o h ave n ot l e s s than
,

nam e s Thes e lis ts a r e t o b e m a d e o u t by st at es an d will

.
,

b e treat ed by u s w ith t h e stri ct e s t co n fid e n ce a n d re t u rne d

t o yo u pro m ptly at t he e x pirati o n o f t he cam pa i gn We will .

f u rni sh ne ce ss ary cir cu la r s t o b e m ail e d t o a ll yo u r cu st o m er s ,

a n d p a y t h e p o s t a ge b u t yo u a r e t o a d d r es s e nv e l o p e s t o
,

e a ch d e al er in t h e e n tir e li s t Th es e cir cu l ars a r e ca ref u lly

.

prep ar e d a n d e x p lai n f u lly t o yo u r d e al er t h e p l an wh er eby

he can o bt ain s pl en d i d a d verti s ing r et u rn s f o r a very s m all
o u tl ay .

Y ou ar e a l s o t o s ecu r e a ll o rd er s p o ss ib l e throu gh yo u r
o wn s al e s m e n in t h e t errit o ry n o t co v e r e d by t h e s al es m en
that w e will f u rn i sh .

T h e cir cu l ar s will b e m ail ed t o e a ch o f you r c u s t o m er s ,

n o t t o e x ce e d a n d wh e r e p o s s i b l e a s s t a t ed a b o ve
, ,

will b e f o llowe d b y t he ca ll o f o n e o f o u r s ale s fo r ce w ho will ,

t ake o rd ers in yo u r nam e f o r t h e s ign s s en d i n g t he o rigi n a l

,

o r d er s t o y o u d a ily a n d a d u p li cat e co py t o u s f o r o u r

inf orm ati o n .

T h e si gn we p r o p o s e t o f u rn i sh i s m a d e f ro m e ith er
l 0x28 1 2x 24 o r 1 2x 3 6 i n ch 3 0 gau ge m et a l e m b o ss e d s i x
, , , , ,

h o l e s p u n ch ed va rni sh e d t h e a d ve r ti s i n g co nt aine d th er eo n
, ,

t o b e a s p er ske t ch m a d e b y u s a n d a ppro v ed b y y o u a m pl e ,

s p a ce b ei n g l ef t f or t h e nam e o f d e al e r an d a l s o n am e O f
t own whi ch w e wil l i m prin t in qu an titi e s o f 1 00 or m u lti pl e s
,

ther eof a s o rd ered .

Thi s clu b will b e m ad e u p o f fiv e o r m ore lin e s a n d y o u

will b e th e onl y fir m in yo u r li n e O ur s ales for ce ar e r cp .
‘
t
 B RAN D S TRA D E MARK S? A D V E RTI SIN G
,
-
29 1

res e n ti n g fiv e o r m ore m anu fa ct u rer s w ho s ell t o d i ff er en t

d e al er s in t h e s a m e t own a n d t hro u gh thi s m ea ns w e a r e
en ab l ed t o m ak e t hi s o ff er .

T h e pri ce will a ppr o x i m at e p er h u n d r e d s i gn s .

A ct u a l pri ce will b e q u ot ed a ft er yo u d e ci d e o n s iz e o f Si gn
a n d d e s i gn o r tr a d e m ark d e s ir e d -
T h e pri ce will v ary b u t
.

littl e f ro m t h e a p pro xi m at e d p er h u n dr e d .

Thi s lo w pri c e has b een figu re d u po n t he b as i s o f s ecu ri n g

o rd er s t o t h e a m o u n t O f a t l e a s t s i gn s U p o n t h e .

p erfo r m an ce b y yo u o f t h e co n d iti o n s h e r e i n co nt ain e d ,

h owev e r w e a gree ( th a t in t h e ev e n t o f t h e t o t al n u m b e r o f
,

o r d er s f a lli n g s h o rt o f thi s m ar k ) n o t t o ch ar ge y o u m o r e .

than t h e pri ce we m ak e yo u o n t h e b as i s o f o u r s elling

s i gn s At t h e cl o s e o f t h e cam p ai gn y o u a gre e t o
.

pl a ce a n o r d er with u s f o r t h e a ct u a l n u m b er o f s i gn s f o r
whi ch yo u h ave r ece ive d o r d er s fr om yo u r d eal er s a n d n o
'

ca n ce ll a ti o n s ca n b e a cce p t e d a ft er t h e c a m p ai gn i s cl o s e d

a n d thi s o r d e r h a s b e en p l a ce d b y y o u .

Term s 1 % t en d ays n et 30 d ay s fro m d at e of invo i ce ;

,

s hi pm en t s F O B f act o ry b y w ay o f N Y N H
. . .
, H R R. .
,
. . . . .

a n d conn e cti n g li n e s C l ai m s f o r l o ss in t r ans it of shi p

.

m ent s if a n y t o b e m a d e b y yo u d ir e ct t o t h e r a ilr o ad co m
, ,

p an y o u r r e s p on s i b i lity cea s in g o n r e ceivin g r ecei p t f ro m

,

rai lr oa d co m p a ny t ha t go o d s ar e r e ceive d in go o d conditi o n .

Y o u ar e t o a dd r e ss e n ve l o p e s a n d pr e par e in tri pli ca t e

a li s t o f t h e o r d ers r ece iv e d b y y o u f r o m t h e cir c u l ar s f r o m ,

yo u r s al e s m en an d fro m o u r s ales fo r ce o n b l a nk s whi ch w e

will f u rni sh whi ch li s t we s h all u s e in m an u fa ct u ri n g t he
,

s i gn s f or yo u r cu s t o m er s Y o u ar e t o p ay u s f o r t h e n u m b er
.

o f si gn s a ct u a lly s o l d a t t h e pri ce a gr ee d Y o u r d e al er s a r e .

t o r e m it d ir e c t t o y o u .

A s w e h er ei n o ffe r y o u t h e e x cl u s ive m em b er s hi p in yo u r
parti c u l ar li n e t o t hi s cl u b w e m u s t a s k yo u r d efini t e
,

a c ce p t an ce o r r e f u s a l in fiv e d ay s a ft e r d a t e h er eo f .

Y o u r s very tr u ly ,

( si gned ) Atl as Si gn C om pan y .

Sh o u l d th e p r op o s a l h a v e b ee n a c ce p e d t by th e
C hi co p ee H o si e ry C o m p a ny ? This co m p a ny m a n u
fact u r e s m e d i u m an d hi gh p ri c e h o si e ry f o r m e n a n d-

w o m e n I t e m p l o ys sa le s m e n t o co v er d ep art m e nt
.

st o r e s an d wh o l e s al e rs in th e c iti es o f th e Unit e d
St a t e s with p o p u l a ti o n a n d o v e r T he co m .

’
p an y s a l es m e n a ls o c o v e r wh o l es a l e rs in s m all e r c iti es
s .

Ab o u t 6 0% o f th e p r o d u c t o f th e C hi co p ee H o si ery
C o m p a ny is s o l d u n d e r its o w n tr ad e m a rk whi ch is -
,

a d v e rtis e d in m a ga zin e s o f n a ti o n a l c ir cu l ati o n T he .

r em a in d e r O f th e p ro d u c t is s o l d u n d er wh o l e s al e rs
’
292 MARK E TIN G PR O BL E M S
an d r e t a il ers p riva t e br a n d s T h e p r o p o rti o n o f pri
’
.

v a t e br a n d go o d s m a nu fa ct u r ed h as sl o wly d eclin ed
d u rin g t h e l ast t e n y e a rs T h e t o t a l v o l u m e o f s al e s
.

o f th e co m p a ny h as s h o wn a st ead y in cr e as e .

197 . A LB E M A R LE M A N U F A C T U R I N G C O M P ANY
N E W S P A P E R A D VE R T I S I N G
The A lb em arl e M a nu fa c tu r in g C o m p any m ak e s a
v a ri e ty o f p a ck age an d c a nn e d f o o d p r o d u cts w hi ch
ar e s o l d d ir e c tly t o r e t a il e rs .T h e a d v ertisin g cam
p a ign s o f th e co m p a ny ar e p l an n e d o n e y ea r in a d v a n ce .

O r d in arily p r o visi o n is m ad e f or f ea t ur in g o n e a rti cl e

o r gr ou p o f a rti c l e s e a ch m o nth . T h e s e l e cti o n o f th e
a rti cl e s t o b e f ea t u r e d is in a cco r d a n ce with th e s ea s o n a l

d em a n d Thr o u gh t h e A lb em ar l e h ou s e o r ga n an d th e
.

instru cti o ns th a t ar e issu e d by th e s al e s m a n a ger th e ,

'

eff o rts o f t h e s a l e s m e n ar e d ir e ct e d e a ch m o nth t o w a r d

th e a rt i cl e s th a t a r e f e a t u r e d in th e ad v ertisin g . T he
o th e r a rti cl e s th a t th e c o m p a ny s e lls a r e n o t t o b e

n egl e ct e d by th e s a le sm e n b u t by givin g sp e ci a l
,

a tt e nti o n t o th e a rti cl e s th a t ar e f e a t ur e d it is e xp ect e d

,

th at th e t o t a l v o lu m e o f s a l e s w ill b e in cr eas ed .

A d v e rtis em e nts ar e p l ace d in w e ekly a n d m o nthly

m aga zine s o f n a ti o n a l c ir cu l a ti o n .

Fo r wh a t s p ec ifi c pu rp o s e s can n ewsp ap er a dv er
tis in gf b e u se d a d v a nt age o u sly in s u ch a cam p a i gn a s
A ttai n a ble I dea ls i n N ews pa per A dver ti s i ng p u b lis h e d by O M ar a
’
,

a nd Or m sbee .
 B RAN DS TRA D E M ARK S A D VE RTI SIN G
,
-
, 293

this ? Wh a t typ e o f n ewsp ap e r will o r d in arily b e m o st

s rvi
e ce a bl e ? Sh o u l d tr ad e p ap e rs a ls o b e u s e d in this
cam p a i gn ?

198 . B E L GRAD E HA T C O M AN Y
P —
AD VE R TI SI N G P LAN S
T h e H u nt e r A d v ertisin g A gen cy h as o bt a in e d as
o n e o f its cli e nts th e B e l gr a d e Ha t C o m p a ny T he
‘

B el gr a d e Hat C o m p a ny m a nu fa ct u re s m e n s h ats O f
’

hi gh q u a lity T h e n ew p l a ns o f d istrib u ti o n p ro vi d e
.

fo r t h e s a l e o f its p r o du ct u n d er th e B e l gr a d e br a n d ,
t o b e n a ti o n al ly a d v e rtis e d A syst em o f ex clu siv e
.

a ge n cie s in th e re t a il tra de is t o b e est ablish e d O n e o f .

t h e p r o visi o ns o f th e ag r e em e nt with th e e x cl us iv e
a ge nts is th a t th e B e l gr a d e Ha t C o m p a ny will p a y

o n e h a lf th e co s t o f th e l o ca l a d v e rt is in g by t h e r e t a il
-

a ge nts . A ssist an ce is to b e r e n d er e d to th e l o ca l a gents

in p l a nn in g th eir ad v ertisin g M a ga zin e s an d o th er
.

m e d i u m s a r e t o b e u s e d in th e n a ti o n a l a d v ertisin g
c am p a i gn .

T h e B e l gr ad e Ha t C o m p a ny h as a n a d v e rtisin g
m an a ger w h o is t o fu rnish a p o int o f co nt a ct b e tw e e n
his com p a ny a n d th e a d v ertis in g a gen cy T h e a d v e r .

t is in g age n cy is t o f o rm u l at e th e a d v e rtisin g p l a ns .

Th e y a re to s u b m it th e p l a ns to th e B el gr ad e Ha t
C o m p a ny f o r app r o v a l . T he a d v ertisin g a ge n cy is
a ls o t o p r ep ar e th e co p y a n d t o m a k e a rr a n ge m e nts

fo r carryin g o u t th e p l a ns s u ch a s m a kin g co ntr a cts

,

with p u blishe rs f o r s p ace .

Wh a t a r e th e m a j o r q u esti o ns th a t th e a d v e rtisin g
a ge n c y m u st d e c i d e in t h e f o rm u l a ti o n o f th e a d v ertisin g

p l an s fo r th e B el gr a d e Ha t C o m pa ny ?
 94 MARK E TIN G PR O BL E M S
1 99 C U Y A H O GA FA C E
. B R I CK C OMPAN Y
—
A DV E R T I S I N G
P LAN s
T h e C u y ah o ga Fa ce B ri ck C o m p any is l o ca t e d in
O hi o . B e cau s e o f th e li m it a ti o ns i m p o s e d by fr ei ght
ra t e s , 90% o f th e s a l e s o f this com p a ny a r e m a d e within
500 m il e s o f its p l a nt .

T h e com p a ny h as a n e xhibit r o o m in whi ch a co m

l
p e t e s et o f p a n e ls is s et u p in m o rt a r t o e xhibit t h e
v ari o u s sh a d e s , sh ap es , an d siz e s o f fac e bri ck in s e v e r al
c o l o r com bin a ti o ns .Sa l es m e n a r e e m p l o y e d to ca ll
u p o n c o ntra ct o rs , a r chit e c ts , a n d p r o s p ec tiv e o wn e rs

o f b u il d in gs t o b e co nstru c t ed I n th e e xhibit r o o m
.

p ro sp ectiv e b u il d ers a n d o th e rs wh o ar e int e r e st e d h av e

an o p p o rt u nity t o f o rm u l at e a n o p ini o n as t o t h e u s e

o f f ace bri cks .

Th is com p a ny h as n o t a dv e rtis ed u p t o th e p r e s ent

t im e I f it w e r e t o p l a n a n a d v ertisin g cam p a i gn , t o
.

wh o m sh ou l d th e a d v ertis em ents b e d ire ct ed ?

200 . M A Y F L OW E R SU G AR R E FI N I N G C O M P AN Y
A D V E R T I S I N G A N D P R I C E P O LI C I E S
T h e s al es m a n age r o f th e M ayfl o w e r Su ga r R efini n g
C om p any m a d e th e f o ll o win g a nn ou n cem e nt t o th e
wh o les al e an d j o bbin g tra d e , M a r ch 20, 1 9 1 7 :

B eli evin g in t h e j obb er s ab ility t o d i s trib u t e s u gar t o

’

o u r m u t u al a d va nt a ge w e d e s ir e t o u s e yo u r f o r ce in a ss i s t
,

in g u s in p l a ci n g “ M a yfl ower P a ck a ge Su gar in t h e h a n d s
o f t h e r et ail tr a d e .We ar e n ot d o i n g a ny s pe ci alty work
 BRAN DS ,
T RA D E - MARK S,
'
A D VE RTI SIN G 29 5

or gen er al a dv e rt i s ing , s o th at in r et u rn fo r t his e ffort o n

yo u r p art w e ar e pre p are d t o m ak e y o u a cert ai n adve rt i s i ng
“

”
a ll o wan ce Thi s w e en um er at e b e l o w :
.

Com N ew
pe t i t ors M a yfl o w e r M a yfl o we r
D iff e r e n t i al Difl er e n t ia l Ad v e r t n g
’

u u
O v e r B lk Ov e r B lk All w a n ce o
2 lb b a gs ( p ack e d in
.

2 lb b a gs ( pack e d in b a rr els )
. .

2 lb car to n s ( p a ck e d 60 t o a
.

ca e s )
3 /
1 lb b ag ( pa ck ed in b a r re ls
.

my s
on 0 0 0 0 0 0 0 0 0

3/ 2 lb c ar to n s ( p ack e d 3 2 t o a
l .

lb b a gs ( p ack ed i n
.

5 lb b ags ( pack ed i n b a rr els )

. .

5 lb ca r to n s ( p ack e d 24 t o a
.

ca e s ) ”

10 lb . b ags ( p ack e d i n s ack s )

10 lb . b ags ( pack e d i n b ar rels ) .

25 lb . b ags ( pack ed 4 to a s ack )

25 lb . b ags ( pack ed in b ar r els )

Y o u will s e e that t h e pro p o s a l i s t o li s t o u r p a ck a ge s u gar

at t h e s a m e d i ff er e n ti a l o v e r b u lk a s co m p eti n g b r a n d s , a n d
to cr e d it yo u o n o u r i n vo i ce with a n a d v erti s i n g a llowa n c e
“

a s a d ir ect r et u rn t o yo u f o r p u shi n g t h e s a l e o f o ur p a c k a ge
s u gar i n s t ead o f o u r s pen d i n g thi s m oney ind ir ectly t hr o u gh
a d v erti s ing .

We a r e stro ngly o f t h e o pini o n th at thi s pro po s al will

work t o o u r m u t ual a d van t age , a n d h o pe t o hav e yo u r f u ll
r ti on
co o p e a .

Wh a t f act o rs h a d to b e t a k e n int o accou nt by th e

M a yfl o w e r Su ga r R e fining C om pany in d ecid in g u p on
this po li cy ?
 P A R T VI I I

P R I C E P O LI C I E S

HE f o ll o win g p r o bl e m s brin g ou t t h e p rin ci p l e s

of p ri ce d e t e rm i n ati o n a n d t h e r e l a tio n of p ri ce
p o li ci e s t o o th e r s a l e s p o li ci e s .

20 1 . P I TT SB U R G H B A S I N G P O I N T SY ST E M
T he f o llo win g st a t em e nts s u mm a riz e th e a pp li ca
ti o ns a n d a nsw e rs r e ce iv e d by th e Fe d e ra l Tra d e C o m
m issi o n co n ce rnin g th e s o ca ll e d P ittsb u r gh B a sin g
-

Syst em f o r St eel 1
.

AP P LI CA T I O N OF T HE W E ST E R N A S SO C I AT I O N OF RO LL E D
STE E L C O N S UM E R S

T he We s t ern A ss o ci ati o n o f R o lle d St eel C o n s u m er s ,

a v o l u nt ary a ss o ci ati o n with h e a d q u art e r s in C hi ca go m ak e s ,

a p p li cati o n t o t h e Fe d er a l Tr a d e C o m m i ss i o n t o ins tit u t e

a p r o cee d i n g in r e s p ect t o t h e vi o l ati o ns o f la w a n d t o i ss u e

a co m p l a i n t a ga in s t t h e Un it e d St at e s St e e l C or p o r ati o n

a n d it s s u b s i d i ary ( ior p o r a t io n s ; a n d a ga in s t t h e I n l an d St ee l

C o m pan y o f C hi cago ; t h e I n t er st at e Ir on a n d St ee l C o m
,

p an y o f C hi ca go ; t h e St e e l a n d T u b e C o m p a n y o f A m eri ca
, ,

C hi ca go ; o n t h e gr o u n d s o f u nl awf u l r e str ai n t o f trad e an d

o f p ri ce d i s cri m i n ati on c o n t r a r y t o t h e p r o vi s i o n s o f t h e

a n ti tr u s t a ct s a n d o f u nf a ir c o m p etiti o n in t r a d e a ga i ns t
-

t h e co n s tit u e n t m em b e r s o f t h e p e titi o n er s a ss o ci a t i o n t o ,

t h e i n j u ry o f th eir b u s i n e ss a n d t o t h e i n j u ry o f o t h e r s t e e l
fab r i cat o r s o p er at i n g in t h a t p a rt o f t h e Un it ed St at e s th a t
co m pri s e s gen e r a lly t h e C e n t r a l We s t e r n N o r t h w e s t ern a n d
,

So u t hwe s t ern s t at e s T h e p e t iti o n er as s o ci ati o n i s co m p o s e d

.

o f u pwar d o f 700 f a b ri ca t o r s o f s t e e l e n ga g e d in t h e m an u

f a ct u r e a n d s al e in in t e r st at e co m m er ce o f pro d u ct s o f
whi ch ro ll e d s t e e l i s a co n stit u en t part .

Fe d e r al T r a d e C o m m iss io n : A p p li ca ti o n s A ns wer s a d S t t , ,
n a e

m en ts Concern i g the S o ca l led P i tts bu r gh B si g P ai t f

n — a S te l O c t o be r
n n or e ,

A b r ie f r e fer e nce t o m e t ho d s o f q uo ti n g pr ices of pig i ro n is giv e n

in Steel a nd M etal Di ges t Jul y 19 1 8 p 4 1 3
, ,
. .
298 MARK E TIN G PR O BLE M S
T he Unit ed St at e s St e el C o r porati on , r es pon d ent ,
thro u gh t h e s u b s id i ary com pan i e s whi ch it own s an d co n
tro l s , a m ong whi ch a r e t h e Illin o i s St ee l C om pany a n d t h e
C arn egi e St ee l C o m p any , i s en gaged in t h e pro d u cti o n a n d
s al e in i n t er st at e co m m er ce o f r o ll e d iro n an d st eel , incl u di n g
pl a t e s , s h a p es , s h eet s , a n d b a r s , a n d o th e r p r o d u ct s o f t h e i r
ro lli n g m ill s T h e r es po n d en t s h ave o n e o f their princi p al
.

pr od u ci n g p l ant s at So u th C hi cago ; a n d o p erat e o t h er p l an t s

at J o li et , Illino i s ; at D u l u th , Mi n nes o t a ; Milwa u k e e ,
Wi s co ns in ; Pitt s b u rgh , P en n sylva n i a ; a n d el s ewhere .

T h e r o ll e d s t eel m a d e in t h e C hi cago d i stri ct by t h e

re s pon d ent , Un it ed St at e s St e el C or por ati on , thro u gh it s
s u b si d i ari e s , an d b y t h e re s pond ent s , I n lan d St eel C om pany
a t I n d i a n a H ar b o r , I n d i a n a , by t h e I n t er st at e Iro n a n d

St ee l C o m pan y a t E a s t C h i ca go , In d i an a , a n d t h e St eel a n d
Tu b e C o m pan y a t Ind ian a H ar b or , I n d i an a , i s pro d u ced a t
a co s t s u b s t an ti a lly l ower th a n a t t h e C arn egi e p l ant o f t h e
Uni t ed St at e s St e el C o rp orati o n at Pitt sb u rgh , P en nsylvani a ,
or a t o th e r p l a nt s a t Pitt sb u r gh o r a t o t h e r p l a ce s e a s t o f
G ary o r e l s ewh er e a n d o v er o n e fift h o f t h e r o ll ed s t eel m ad e
-

in t h e Un it ed St a t e s i s m ad e b y t h e r e s pon d ents a t G ary ,

I n d ia na , whi ch i s d i st an t n o t m or e than thirty m il e s by
r ail f ro m C hi cago , at J o liet whi ch is ab o u t f orty m il e s f rom
C hi ca go , a n d a t E a s t C hi cago a n d I n d i a na H ar b o r whi ch
a r e b etwe e n C hi ca go a n d G ary . Pitt sb u rgh , P enns ylva ni a ,
i s d i st an t fro m C hi ca go s u b s t an ti ally 500 m ile s T h e lower .

c o s t o f p r o d u ci n g at G ary , C h i ca go , J o liet , E a s t C hi ca go ,

a n d I n d i a n a H ar b o r , a s com p ar ed with t h e co s t o f pr o d u ci n g
ro ll ed s t eel a t Pitt sb u rgh , is d u e t o t h e shortne ss an d d ir ect
ne ss o f t h e all-wat er tran s p ort ati o n o f o r e fr om t h e m i n e s of
Minne s o t a t o t h e m ills in t h e C hi cago d i stri ct an d t h e
pr o x i m ity o f thes e m ill s t o co al .

It is st at e d tha t G ary, I n di an a , i s t h e s e cond l arges t

prod u ci n g d i stri ct o f r oll e d ir o n a n d s t eel an d t h e o nl y l ar ge
pr o d u cer o f p r a cti cally t h e en tir e li n e o f s t e e l p ro d u ct s o u t
s i d e t h e Pitt sb u rgh d i stri ct T h e G ar y p l a n t o f t h e Uni t ed
.

St at es St ee l C or p or ati o n w a s con str u ct ed in 1 906 a n d h as

s i n ce b e en e nl ar ge d It h a s a f avorab le l o cati o n f o r t h e
.

e c o n o m i cal p ro d u cti o n o f r o ll e d s t ee l . It i s s t at e d that t h e

p l an t s o f t h e r e s p ond e n t s a t G ary , C hi ca go , J o li e t , E a s t
C hi ca go , an d I n d i a na H ar b or f r o m ti m e t o t i m e h av e b e en
rapid ly e n large d .

In t h e year (f or ) whi ch t h e l a s t o ffi ci al s t ati s ti cs

wer e a cc es s ible , a b o u t 86 p er cen t o f t h e en tir e pro d u cti o n
o f ir o n o r e ca m e f r o m t h e L ak e Su p eri o r d i s tri ct , whil e 1 0

p er c en t th er eo f c am e f r o m t h e Bir m i n gham d i s tri ct , 2 %

p er ce n t fr o m t h e thr e e St at e s o f P enn s ylvani a , N e w Y o rk ,
a n d N e w J er s ey , a n d p e r c en t f r o m C o l o r a d o Th at
.

1
o
Fe d e r al T r a de C m missi on : A pplicati on s , e t c. , pp 7 -
. 9 .
 PRI C E P O LI C I E S 299

the gr eat est n orm a l gr owt h a n d increa s e in ir o n a n d s te el

pr o d u cti o n u nd er p ea ce c o n d iti o ns will na t u r a lly an d n or
m ally b e in a n d a b o u t C hi cago , wh er e t h e gr e at pl ant s a t
G ar y , C hi cago , J o li et , E a s t C hi ca go , a n d I n d i an a H ar b o r
a r e l o cat ed , b y r ea s o n o f t h e ch e a p er co s t o f p r o d u cti o n
thereo f t han at o t h er p l a ce s ; a n d t ha t th e pri n ci p a l nat u ra l
a n d nor m a l gr o wth a n d i n cr e a s e o f t h e c o n s u m pti o n an d
d em an d o f iro n a n d s t e e l a n d t h eir pr o d u ct s n o w i s a n d wi ll
b e in t h e Mi d d l e We s t a n d t h e t errit o ry tri b u t ar y t o t he
C hi cago d i s tri ct .

T h e a p pli can t s u bm it s t h at t h e n or m a l an d r eas o nabl e

pri ce f o r r ol le d s t e e l s h o u l d b e m eas u r e d by t h e c o s t o f
pr o d u cti o n , with t h e a dd iti on o f a r ea s o n ab l e p r ofit , with o u t
t h e a dd iti on o f a l arge a n d ar b itr ary in cr e as e , w hi ch f o r m s
n o p a rt o f t h e co s t o f pr o d u cti o n a n d i s o v e r a n d a b o v e s u ch
r eas o n ab l e profit T h e d i stri ct an d t errit ory in whi ch t he
.

f a ct ori e s o f t h e m em b er s o f t he a ppli can t as s o ci ati o n a r e

s it u at ed i s tri b u t ary t o t h e l o cati o n o f t h e m ill s a t o r ne ar
C hi cago , wh er e r o ll ed ir o n a n d st ee l a r e pr o d u ce d a t t h e
lowe st co s t a n d wh ere an d t o a n d fr o m whi ch t h e gr eat e s t
a n d t h e sh ort e s t f a ciliti es f o r tr ans p o rt a ti o n f r o m m ill t o
co ns u m er a r e an d will c o n ti n u e t o b e f u r n i sh ed .

T h e a p pli cati o n o f t h e pri n ci p l e o f pri ce fixing a t co s t

pl u s a r eas on ab l e pr o fit an d o f t h e la w o f s u pply a n d d em and
r equ ir es that t h e pri ce o f ro ll ed st ee l in t h e C hi cago d istri ct
sho u ld b e as lo w a s a n d n ot gr eat er than t h e pri ce a t an y
o th er p o i n t o r in a n y o th er d i s tri ct i n t h e U n it e d St at es .

T h e fixing o f a n y hi gher pri ce f o r r o ll ed s t ee l pr o d u ce d in

that d i stri ct i s arb itrary, ar tifi ci al , u n r e as o na b le , a n d
u n eco n om i cal , an d give s t o t h e r es po nd e nt pr o d u ce r s
ex ce ss iv e a n d u n r eas o n ab l e p r ofit s .

It i s s u b m itt e d tha t if b as i n g po i n t s ar e e co no m i ca lly

s ou nd , then , in t h e int eres t o f t h e tr ad e o f co ns u m er s a n d
—

prod u cer s a n d o f t h e d i s tri cts or s e cti o ns to b e s e rv e d a n d

a ff e ct e d— th eir s e l e cti o n sh o u l d t ak e into vi ew th eir s it u a
ti o n with r es pect to co s t O f pro d u cti o n , s u pply , an d pro x i m ity
to exi s ti n g a n d gr owi n g gr e at er d em an d u n d er n orm a l an d
n at u ral co nd iti o n s I n a n y pro per co ns i d er atio n of t he
.

q u esti o n , t h e a p pli can t m aint ai n s th at if a b as ing point o r

b as i n g p oint s a r e t o b e co ns i d er ed as pr o per a n d r e co gni z ed ,
C hi ca go b e s t a ns wers a ll t h e co nditi o ns an d sh ou ld b e a
bas ing point .

In s u pport of this a ppli cati on yo u r petiti oner s et s f orth

,

t he f o ll owing f act s as co n s tit u ti n g t h e vi ol ati o n s o f la w

com p l ai n e d o f
1 That s ai d Unit ed St at e s St e e l C or po ratio n a n d it s
.

s u bsid iary co m pany t h e Illi n o i s St e e l C o m pa n y a cti n g

, ,

u nd er its contro l an d d ir ecti on an d t h e s ai d I n l a n d St e e l

,
3 00
,
MARK E TIN G PR O BL E M S
C o m pany a n d t h e I n t e r s t at e Iro n St e e l C o m pan y an d t h e
St e e l Tu b e C o m pa n y o f A m eri ca , a fore s aid , u po n s al es
in i n t er st at e co m m er ce f or u se , co n s u m pti o n , o r r e s a l e withi n
t h e Un it e d St at e s , a re a n d s i n c e o n o r a b o u t t h e l st d ay o f
J u ly, 19 1 8 , h ave b een , chargi n g to t h e m em b er s o f t h e
p etiti o n er a ss o ci ati o n a n d t o o th er p u r ch a s er s in t h e St at e s
m e n ti o n e d in p ara gra ph 1 h er eo f , f o r r o lle d st e e l co n s i s ti n g
o f ir o n a n d s t ee l p l a t e s , s ha p e s , s h e e t s , a n d b a r s , a n d o th e r
ro ll ed st ee l pro d u ct s O f their re s p e ctive m ill s , whi ch a r e b y
-

th em r oll ed an d m an u f a ct u re d a n d d elivere d at o r shi p pe d

fro m their s a i d r e s pe ctiv e r o lli n g m i ll s s it u at e d a t G ary,
I n d i ana H arb o r , a n d E a s t C hi cago , I n d , a n d C hi cago .

H ei ght s , a n d J o li et , Ill , a t a pri ce whi ch i s fi x e d by a dd i n g

.

t o t h e pro p er p ri ce th er eo f a s m e a s u r e d b y t h e co s t o f pr o d u c
tio n pl u s a f air a n d r e a s o nab l e pro fit , t h e am o u nt o f t h e
r ailro a d frei ght charge s or co s t o f trans porting s u ch comm o d i
tie s fr o m Pitt sb u rgh , P a , t o C hi cago , o r t o t h e d e s tin atio n
.

where they ar e t o b e r e ceive d by t h e p u r cha s er s , re s p e ctively,

l e ss t h e f re ight charge s from t h e p la n t s o f s u ch pro d u cers t o
s u ch d e stin ati o n , a s if s u ch co m m o d iti e s were in f a ct shi p pe d
fro m Pitt sb u rgh , i n st e a d o f b ei n g shi pp e d fr o m their r es p e c
tive m ill s a t G ary, C hi cago , Ind i ana H arbor, E a s t C hi cago ,
o r J o liet , a s t h e f act i s .

In other word s , t h e pri ce s o f s u ch com m o d iti e s ar e in

cr e a s ed b y l arge fi ctiti o u s fr e i ght r at e s , whi ch a m o un t t o

p er t on o r ther e ab o u t s , a n d whi ch a r e n o t in cu rre d o r

p a i d a n d a r e n o t a n y p r o p e r e l e m e n t o r p art o f t h e p ri ce o f

s u ch co mm o diti e s , b u t a r e a n arb itrary an d ex ce s sive an d

u n r e as o n ab le a dd iti o n th er et o .

2 Th at m an y o f yo u r co m pl ainant s , m em b er s o f t h e
.

p etiti on e r a s s o ci ati on , a r e co m p etit o r s in b u s in e s s in int er

s t at e co mm er ce o f o the r f abri cat o r s in wha t i s known a s t h e
Pitt sb u r gh d i stri ct o r in t h e St at e s e a s t o f I n dian a , w h o have
b ee n d u rin g t h e s am e p eri o d an d a r e a l s o p u r cha s er s in
in t er st at e c om m er ce f ro m r es pon d ents o f l ik e co mm o diti e s ,
a n d t o s u ch co m p et it io r s t h e s a i d r e s p o n d ent s h av e b een

a n d a r e s elli n g s u ch co m m o d iti e s a t p ri ce s s u b s t anti ally l e ss

t ha n t h e s a i d pri ces b y them e x act e d fr om an d pai d by t h e
m em b ers o f t h e a p p li cant a ss o ci ati o n a s a for e s ai d .

3 Tha t t h e r e s p on d ent s d u ri n g s ai d p eri od h av e b een

.

a n d a r e s e lli n g s u ch co m m o d iti e s t o s u ch co m p etit o rs at

Pitt sb u rgh an d in t h e Pitt sb u rgh d i stri ct o f t h e com plaini ng
m em b er s o f t h e a ppli cant as s o ci ati o n f o b Pitt s b u r gh a n d
. . .

a t pri ce s l e ss b y t h e a m o u n t s o f t h e r u li n g f r e i ght ch ar ge s o n
lik e co m m o d iti e s f ro m Pitt sb u rgh t o C h i cago , o r by s u b
s t an t ially th a t s u m , t h a n t h e pri ce s so m a d e t o t h e m em b e r s

o f t h e a p p li ca n t a ss o ci ati o n o r o th e r f ab ri cat ors o r co n

s u m er s l o cat e d in t h e C hi cago d i s tri ct , o r in t h e t errit ory

 PRI C E P O LI C I E S 3 01

tri b u t ary th eret o f o r li k e co mm o d i ti e s pro d u ce d a t

, G ary ,
C hi cago J o li et E a s t C hi ca go a n d I n d i a n a H ar b o r
, , , .

5 . Th at
t h e effe ct o f s u ch d i s cri m inati o n in pri ce i s t o
ca u se to a n d i m p o s e u p o n t h e r e s p ect iv e m e m b er s o f t h e
a p pli ca nt wi th r e s p e ct t o s al e s o r at t e m pt e d s a l e s b y t h e m

o f t h eir p r o d u ct s t o c u s t o m er s in t h e Pitt s b u r gh d i s tri ct ,

o r in t h e t errit o ry e a s t o f s a i d C hi ca go d i s t ri ct , t h e gr e at
co s t o r s u m a m o u n ti n g t o s u ch fi ctiti o u s f re i ght r at e f ro m

Pitt sb u rgh t o C hi ca go , in a dd iti o n t o t h e co s t o f tra n s port a

ti on o f t he ir o wn pro d u ct f r o m t h eir mi ll s t o their c u s t o m ers
in t he Pitt sb ur gh d i s t r i ct o r t e r r it o r y e a s t o f I n d i a n a , a n d
t h er eb y pr a cti cally t o e x cl u d e t h em fro m s u ch tr a d e in co m
p etiti o n with fa b ri cat or s l o cat e d in s ai d Pitts b ur gh or
e a s t er n d i s tri ct o r t errit o ry

9 Th at to m eet t h e s ai d Pitt sb u rgh b as e pri ce t he

.
1

re s po n d ent s w ho h ave m ill s in t h e C hi cago d i st r i ct m a k e

, ,

pri ce s a n d s e ll t o p u r ch a s e r s in t h e Pitt s b ur gh di s t r i c t o r iii

t errit ory b etwee n t he e a s t lin e o f I n d i an a a n d Pitt s b u rgh ,

w h o a r e co m p etit or s o f t h e m e m b er s o f a p p li ca n t a t p ri ce s ,

o f t h e Pitt s b u r gh m i ll s a n d t h e m s e lv e s a b s o r b t h e fr e i ght

rat e fr om t heir m ill s to t h e p u r cha s er s pla n t a n d th u s d is ’

cri m i n a t e in p ri ce t o t h e a m o u n t o f s ev er a l d o ll ar s p er t o n
in f avor o f s u ch co m p etit o r s a n d a gai n s t a p pli ca n t s m e m b er s
’
.

1 0 Tha t t h e r e s pe ctiv e r e s po n d en t s d o n o t in a ll cas e s

.

o r u n i fo r m ly m ai n t a i n o r ch ar ge s u ch Pitt s b u r gh b a s e p r i c e
b u t h ave pra cti ce d a n d m a d e a n d d o m ak e o t he r d i s cr i m i n a
tio n s in pri ce in f avo r o f cert ain cu st om er s in t h e C hi cago
d istri ct viz : ,
.

T hey h av e qu ot ed an d m a d e a n d d o q u o t e an d m ak e a s ,

a p pli ca n t i s i n f o r m e d a n d c h a r ge s t o a n d i n fa v o r o f a ll o r ,

c e rt ain a gr i cu lt u r a l im p l e m en t m a n u fa c t u r er s a n d t o ce r ,

t ain o t her c o n s u m er s a n d p u r chas e r s in o r d er t o s e cu r e o rd e rs ,

pri ce s f o b C h i ca go o r f o b m i ll f o r s u c h r o l le d s t e e l w hi c h
. . . . . .
,

is l e ss b y s a id a d d iti o n o f p e r t on o r t h e re a b o u t s t h a n
t he p ri ce s e x a ct e d f r o m t h e m e m b er s o f t he a p p li ca n t
T h e y h av e q u o t e d a n d m a d e a n d d o q u o t e a n d m a k e
p ri c e s t o r a i lr o a d c o m p a n i e s f o r r a i ls a n gl e b ar s S p li c e b a r s , , ,

a n d t ie p la t e s f o b C hi cago o r Pi tt s b u r gh o r f o b m ill
. . . . . . .

Th ey q u o t e a n d s el l b a s i c p ig i r o n at t he s a m e pri ce f o b . . .

C hi cago a n d f o b Pitt s b u r gh . . . .

A p pli can t a d m it s t ha t s u ch p ra cti ce s b es i d e s co n s t it u t ,

in g d i s cr i m i n ati o n s in pr i ce s s h o w t h a t s u ch pri ce fix i n g ,

f o b Pitt s b u rgh s o l ely whi ch i s h e r e i n co m pla ine d o f h as

. . .
, ,

n o tra d e o r e co n o mi c r e as on o r b as i s .

Fed er al T r a de C o mmiss io n : A ppli catio ns e tc p 1 1

1
,
.
,
. .
30 2 MARK E TIN G PR OBLE M S
1 1 Th at t he eff e ct o f th e d i s cri m in ati on s in pri ce af ore
.

s a i d m ay b e an d i s t o s u b sta nti ally l e ss en co m pe titi on an d

t en d s t o cr eat e a m o no po ly in t h e sai d li n e o f com m er ce .

ST A T E M E N T O F T HE APP LI CA N T ,
THE W E ST E R N AS S O CI A T I ON
l
O F RO LL E D ST E E L C O N SU ME R S

IV
That s u ch d i s crim ination in pri ce o f r oll ed st eel pro d u ct s
pro d u ce d by s ai d Unit ed Sta t es St ee l C o r p or ati o n an d it s
s u b s i d i ari es h as be en d urin g t he p eri o d a f o res ai d m ad e an d
, ,

i s b e ing m ad e betwe en d ifferent p u r chas er s o f co mm o diti es

u po n s al e s in whi ch s u ch co m m o d iti e s a r e s o l d a n d p ur ch as e d
f or r e s al e within t he Unit ed St at es ; tha t m any s u ch p u r
ch a s ers w h o a r e m em b ers o f t h e p e titi o n e r as s o ci a ti o n a r e
, ,

d eal ers in s u ch co mm o d iti es an d p ur ch as ed t h e s a m e f ro m

,

t h e r es pond en t s f o r r e s al e within t h e Uni t ed St at e s ; a n d

tha t t h e effect o f s u ch d i s cri m in ati o n h as b een a n d is to
s u b st an ti a lly le ss en co m petiti o n in tha t line o f co m
m er ce b etween s u ch d e a l ers a n d p u r cha s er s w h o a r e l o ca te d
a t C hi cago a n d o th er p l a ce s ne ar or tri b u t ar y th er et o o r in

th e Mi dd l e We s t We s t a n d N orthwe s t wi th t h eir c o m
, ,

petito r s who ar e sit uate d in t h e t errit ory e as t o f G ary .

V
That by reas o n o f s u ch dis crim inati o n th e C hi cago
fab ri cat or s a n d d ea l er s in r o lle d st eel p ro d u ct s a r e p u t a t
a d i s a d vant age as co m par e d with t h e f ab ri ca to r s an d d e al er s
a t Pitt sb u r gh an d in t h e Pitt s b u r gh d i s tri ct in t h e c o m

petiti o n f o r trad e For illu str atio n a t e a ch o f t h e f o llowi ng

.
,

citi e s o f I llino is to th e fo llowing am ou nts :

Am ou nts per cwt .

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Str eator an d P eo ri a
Bloo m ingt o n Fu lt o n G ale sbu rg an d Q u incy
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C air o an d J o hn s t o n C ity . 12
A s t o t h e d i stri ct e a s t o f C hi cago a n d be tw een C hi ca go
a n d Pitt sb u rgh : T h e Wi s co ns in Bri d ge Iro n C o l o ca t ed .
,

a t Milwa u ke e Wi s , 8 5 m il es n orth o f C hi cago a n d wh er e

.
, ,

t h e Uni t ed St at e s St eel C or p or a ti o n h as a r o lling m i ll is a ,

f ab ri cat or o f st ee l a n d a m em b er o f p etiti o ner as so ci ati o n

a n d is a co m p etit or o f a D e tr o it f ab ri cat o r By re as o n o f .

s u ch d i s crim in ati on t h e Wi s co ns in com pany a ltho u gh ,

lo cat ed in s u ch cl os e pro xi m ity t o t h e r e s po nd ent s rolling ’

m ill s a n d a pur cha s er o f st eel pr o d u ced a t s u ch mi ll s is

, ,

pu t a t a d i s ad va nt a ge o ver it s D etro it co m p etit or in b u s ines s

at D etr oit o f $ 5 to $ 6 p er t o n ; a n d this i s tr ue with r efer en ce

Feder al Trad e Co mm issi o n : A pplicati ons e tc pp 1 6 18 , .

, .
- .
 PRI C E P O LI C I E S 303

to th e tito r s of t he Wis cons i n com pan y in Indi ana

com pe ,

Illino i s an d els ewhere

, .

T h e K ewa ne e B o il er C o l o cat ed a t K ewanee Ill b y .

, ,
.
,

reaso n of s u ch d i s crim inati on i s n ot o n ly p u t at s u ch a ,

d i s a d va n t a ge o v er it s co m p etit or s in t he Pitt s b u r gh d i stri ct

in the com p etitio n f o r tra d e at po i n t s e a s t o f I n d iana a s to
s ub s tan ti ally p u t it o u t o f t h e co m p et iti o n b u t at po i n t s ,

in t h e s o u thwe s t s u ch as T u l s a O k l a a n d D all a s T ex
, , , ,
.
,

t h e m an u f act u r e r in t he Pitt s b u r gh d i s tri ct a lth o u gh s ev e ra l ,

h u nd r ed m ile s m o r e d i st ant c an m ak e d elivery in T u l s a , ,

O k l a o r D alla s T ex wit h in a cent pe r po u n d o f wha t it

.
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.
,

co s t s t h e K ewa n e e c o m p any .

M cC o r d C o s t ee l f o u n d er s a t C hi cago an d a m em b er
.
,

o f t h e p etiti o n er a ss oci ati o n h a s a Pitt s b u r gh co m petit o r , ,

an d b oth h a v e a s c u s t o m er s f o r t h e t r a d e with w hi ch t h ey
a r e co m p eti n g a t p o i n t s in P e n n sylv a n i a a n d in t h e E a s t .

By r e ason o f whi ch d i s crim in at i o n M cC o r d Co .

,

a lth o u gh it get s it s st e el f r o m t h e C hi c a go m i ll s i s co m p el le d ,

t o f a c e a h an d i cap o f s u b s t an ti ally p er t on r e pr e ,

s e n ted b y t h e f rei ght rat e fro m Pitt sb u rgh t o C hi ca go whi ch

is n ot earn ed pl u s t h e frei ght u po n it s o w n pro d u ct f r o m
,

C hi cago t o Pitt s b u r gh whi ch is e arn ed S u ch fr ei ght f ro m

,
.

Pitt s b u rgh to C hi cago whi ch i s n ot e arned i s ar b itrary a n d

f or m s n o p art o f t h e p ro p er pri ce f o r t h e st eel O n t h e o th er .

han d t he Pitt sb u rgh co m petit o r can co m pet e with t he

,

M cC o r d C o f o r b u s in e ss in C hi cago an d t h e We s t witho u t
.

a n y s u ch h a n d i ca p a n d as if it s f a ct ory o r m ill w er e a t
C hi cago wh er e t h e M cC o r d m ill i s b eca u s e t he Pitt sb u r gh ,

co m pe tit o r in c o m p e tin g f o r b u s i n e ss a t C hi ca go o r in t h e
,

C hi cago d istri ct p u r ch a s e s hi s s t ee l a t Pitt sb u r gh witho u t

,

having t o pay s u ch u ne arned frei ght a n d t hi s hand i ca p o n ,

t he M cC o r d C o e n ab l es t h e Pitt s b u r gh c o m p etit o r t o
.

c o m p et e o n a n e v e n k eel in C hi ca go with M cC o r d .

T h e E van L R ee d M a n u f a ct u ri n g C o a n d a m em b e r o f
. .
,

t he p e titi o n er as s o ci ati o n i s a m a n u fa ct u r er o f b o lts a n d,

rivet s at St erlin g Ill a n d by r ea s o n s o f s u ch d i s crim i n ati o n

,
.
,

i s com pell ed t o p ay fo r thei r r o ll ed s t eel pro d u ct s at C hi ca go

s u ch pri ce i n cr eas e d a s afo r e s ai d b y t he am o u n t o f t he
, ,

f rei ght r at e fro m Pitt s b u rgh t o C hi ca go a s if they b o u ght

their s t e e l at Pitt sb ur gh A co m petito r b o lt an d rivet co n .

cern in Ohi o m o r e t h an 3 00 m ile s f r o m t h e C h i ca go d i s tri ct

,

in whi ch t h e R eed C o i s s it u at ed a n d trades can b y r eas o n

.
,

o f s u ch d i s crim in ati o n m an u fa ct u r e a n d d eliv er in t h e

C hi cago d i s tri ct it s pro d u ct a t l e ss th an t he R ee d C o can . .

T h e We s t ern Wh e el e d S cr a per C o an d a m em b er o f .

t he p etiti on er as s o ci atio n m an u fa ct u r e s in C hi cago a d u m p,

c ar whi ch it s e lls in co m petiti o n with co m p e tit o rs in t h e

Pitt sb u rgh d i s tri ct T h e st eel in each ca r cos t s t he We st ern

.

C o $ 54 m or e tha n it co sts its Pitt sb u rgh com petitor

. T he .
304 MARK E TIN G PR O BL E M S
Pitt s b u rgh com pe tit o r ca n s hi p its pro d u ct it s o wn car s —

o n t h e ir o w n wh e e l s to C hi cago a t m il e a ge r a t e s a m o u n ti n g
to a n d ca n th e r e f o r e d e liv e r it s pr o d u ct in C hi ca go

p e r c ar che a p er tha n can t h e We s t ern C o altho u gh .

,

t h e We s t e r n C o b u y s it s s t e e l a t C h i ca go
. O n t h e other .

hand t h e We st er n C o in o rd er t o co m pet e in t h e Pitt sb u r gh

,
.
,

d i stri ct i s p u t t o t h e co s t a m o u n ting t o
, m or e t h a n
,

t he Pitt s b u r gh c o m pan y .

T h e r e s po n d en t I n l an d St e el C o , q u o t ed t o H C .
,
. .

C hri st m a n o f D et r o it a p r i ce f o r r o ll ed s t eel o f
, , p er
h u n dr ed we ight f o b D etr o it whi ch i s 26 0 m il e s fr o m t he
. . .
,

s ell er s m ill At t h e s a m e ti m e they char ged a n d e x a ct e d

’
.

a p ri c e f o b C h i ca go o f
. . .
p er h u nd r e d w e i ght .

Wh at i s ab ov e a llege d as s pe cific co n cr et e i ll u str ati on s ,

a pp li es m u t ati s m u t a n d i s t o t h e p u r ch a s es o f r o ll e d s h eet

p r od u ct s a n d t h e tr a d e a n d b u s in e ss o f a ll t h e m em b er s o f
t h e a p p li ca nt a ss o ci ati o n a s a ga in s t an d in f av or o f their
c o m p etit o r s in t h e Pitt s b u r gh o r e a s t er n d i s tri ct Li k e an d .

d iver s o th er a n d d i ff er en t d i s cri m in ati o n s h av e b e en an d

a r e b e in g m a d e b y r e s p o n d en t s in s a l e s t o t h e m em b e r s o f

a pp li can t a ss o ci ati o n .

By r ea s o n o f wh i ch arb itrary in cr e a s e o f pri ce by a d ding

t o t h e f a ir m arke t pri ce o f ro ll ed s t e e l p u r cha s e d b y th e
m em b er s o f t h e a ppli cant a ss o ci ati o n t h e f r e i ght r at e f ro m
Pitt s b u rgh o r b y m ak in g t heir s ale s o n t h e f o b Pitt sb ur gh
,
. . .

b a s i s o f s t e el m an u f a ct u r e d at G ary C hi cago o r in th at , ,

d i stri ct s u ch m em b er s ar e un ab l e t o s ell t h eir p r o d u ct m an u

,

f a ct u r e d f r om s u ch r o l le d st ee l in co m p e titi o n with Pitt s

b u rgh co m p etit or s o r co m p etit or s in t h e Pitt s b ur gh or
e a st e rn d i s t ri ct in t h e t errit o ry e a s t o f G ary I n d a lth ou gh ,
.
,

t h ey have h a d an d ri ght f u lly sho u l d b e per m itt e d t o h ave ,

an d b u t f o r s u ch d i s cri m i n a t i on in p ri c e co u l d co nt in u e t o
have a l arge an d profit ab le tr a d e t h ere in An d whil e b y
,
.

s u ch pr a cti ce an d d i s crim in ati on in pri ce s u ch m em b er s o f

a pp li ca nt as s o ci a ti o n a r e e x cl u d e d f r o m t h e d i stri ct e a s t o f

C h i ca go an d co n fi n ed t o th eir o w n d i stri ct their eas t ern ,

c o m p etit o r s w h o a r e s o th er eb y giv en t h eir e as t ern t erri

,

t ory e x clu s ively ar e als o p l a ced u p o n a n e q u a l b a s i s with

,

s u ch m em b er s o f a pp li can t in t h e co m p etiti o n f or trad e in

their o wn C hi cago or Mi d d l e We s t d i stri ct .

AP P L I CA T I O N O F T HE SUP E R I O R C O MM E R C I A L L
C UB

A ppli cati on m ad e o n b eha lf o f t h e co m m er ce trad e an d , ,

fi n anci al in t er e s t s o f t h e citiz en s in t h e city Of Su peri or ,

Wi s con s in a n d o ther s
,
.

>1< r
ae ar
e

4 . That 1
f or a nu m b er of year s l a s t pas t th e Un it ed
1
Fe de r al T r a d e C o m m i ssio n : A p pli cati ons e t c pp 24 25 ,
.
, .
, .
 PRI C E P O LI C I E S 3 05

St at e s St e el C or po r ati o n , e it h er b y t h e e x er ci s e b y it o f a
m o n o p o li s ti c c on t r o l o f t h e s t e e l i n d u st r y o r b y u n it e d a cti o n
an d a gr e em ent with t h e un k n o wn s t e e l m a n u f a ct u ri n g co m
-

p an ie s a b o v e r e f e rr e d t o , co m m o n l y d e s i gn a t e d a s in d e pen d
e n t s t e el co m p a n i e s , h as fix e d a n d c o n t r o ll e d t h e m ar k e t p r i c e

o f s t e el thr o u gh o u t t h e St a t e s a n d T e r r it o r ie s o f t h e U n i t e d
St a t e s o f A m eri ca ; t h a t s u ch p ri ce h as b ee n fi x ed , d u r i n g
t h e p eri o d a b o v e r e ferr e d t o , u p o n wh at i s k n o wn a n d co m
m o u ly d e s i gn a t e d as t h e Pitt s b u r gh b a s e
“
tha t t he p u r
ch a s er s o f st e e l thr o u gh o u t t h e St a t e s a n d Te rrit o ri e s o f t h e
Uni t ed St at e s a r e , b y re as o n o f t he f a ct ab ove s et fo r th ,
o b li ge d t o p a y f o r s t ee l p u r c h a s e d b y th e m t h e m ar k e t p r i c e
a t Pitt s b u r gh , P a , p l u s t h e c u rr en t f r ei ght ch ar g e fr o m
.

Pitt s b u r gh t o t h e po i n t o f d elivery , irr e s pe ct ive o f t he a ct u a l

shi pp i n g p o i n t o f t h e go o d s p u r ch a s e d ; fo r e x am pl e , a p u r
ch a s e r o f s t e e l a t Su p eri o r , Wis , i s o b li ge d t o p a y f o r s t e e l

shi p pe d a n d d elivere d fro m C hi cago , I ll , o r G ar y ( I n d ) , .

in D u l u t h , Minn , t h e m ark et pri ce a t Pitt s b u r gh p l u s t h e

.

c u rr e n t f r ei ght r at e f r o m Pitt s b u r gh t o S u p e ri o r , n o t w it h
s t and i n g t h e fa ct th at t h e s t eel s o p u r cha s ed b y h im i s in
f act shi ppe d f ro m C hi cago , Ill , o r G ary ( I n d ) , in D u l u t h ,
.

Min n , an d t h e a ct u a l co s t o f shi pm en t fr om t h e p o i n t s l a s t
.

n am e d i s co n s i d er a b ly l e ss th a n th e co s t o f shi pm ent o r

f reight ch ar ged fr o m Pitt s b u r gh

>< l $5

Th i s pra cti ce
1
is
nj u s t d i s cri m i n ati o n a gains t the
an u

c o mm u n iti e s l o ca t e d i n t h e L a k e Su p e ri o r d i s t r i ct T he .

L ake Su peri o r d i s tri ct h a s t h e ri che s t a n d b e s t fie l d s o f iro n

or e in t h e wo rl d . It h a s u n riva l e d tra n s po rt ati o n fa ci li ti e s ,

b o th b y wat er a n d b y ra il N at ur ally the re sho u l d d e velo p

.

in t hi s d i stri ct m arvelou s i n d u stri al a cti v ity e s pe ci ally in ,

th e f a b ri ca ti o n o f s t ee l a n d iro n pro d u ct s b u t f a b ri ca ti n g ,

p l a n t s a r e n o t b e i n g l o c a t e d W h e n w. e i n q u i r e t h e r ea s o n ,

we fin d it t o b e t h e u n j u st p ra cti ce i n v o lve d in m a k i n g t h e
Pitt sb u rgh d i stri ct t h e s o le b a s in g p o i n t f o r s t eel pri ce s I f .

thi s we r e d o n e away wit h it i s b e li eve d th a t a f a i r s h a r e o f

,

f ab ri ca t o r s wo u l d a vail t h e m s elve s o f t h e vari o u s a d va n ta ge s

o ffe re d a t t h e h e a d o f L a k e Su pe ri o r a n d wo u l d l o ca t e h e r e .

N o w it i s n o t t h e th o u ght O f th e Su pe ri o r C o m m e r ci al C l u b
,

th at the Un it e d St a t e s G o vern m e n t sh o u ld e x te n d it a n y
s pe ci a l a id or a rti fici al a ss i s t a n ce in th e d e ve l o pm e n t o f t h e
c ity o f Su p e ri o r a n d t h e s u r r o u n d i n g d i s t ri c t T h e pe o ple .

o f Su p e ri o r a r e willi n g t o s t a n d o n t h e ir o w n f e e t a n d t a k e

their o wn ch a n ce s All th ey a s k o f t h e U n it e d St a te s G o v
.

e r n m e n t i s th a t t h e p r e s e n t a r t i fici a l h a n d i ca p t o whi ch t h e
h ea d o f th e l ak e s i s a t t he pre s en t ti m e ill egally s u b j e ct e d
sh a ll b e r e m o ve d .

1
Fe der al T r a d e C o m m iss io : A pplic at io n e tc pp 29 3 1
ns , .
, .
-
.
3 06 MARK E TIN G PR OBL E M S
In an swer t o thi s a rgu m ent J u d ge G ary th e chairm an , ,

o f t h e b o ard o f d irect o r s o f t h e Unit e d St a t e s St e e l C o r p o r a

tion t ak es th e po s iti on that t h e a b oliti on o f t h e Pitt s bu rgh
,

b a se is n o t f e a s i b l e He f u rt he r c o nt e n d s th at th e e s t ab
.

lish m e n t o f a m ill b a s e i s o u t o f th e q u e s ti on T o b e m ore .

s pe ci fic in d i s cu ss i n g th e q u esti o n o f th e e st abli shm e n t o f

,

a b a s e f or t h e p l a n t l o ca t e d in D u l u th Minn whi ch i s th e ,
.
,

f ea t u re o f t h e wh o l e c a s e tha t i s o f vit al int e re s t t o t h e

Su pe ri o r C o m m erci al C l u b J u dge G ary i n ti m at e d in hi s ,

s pee ch m a d e in D u lu th in th e s u m m er o f 1 9 1 8 that it co s t s
1 3 per cen t m o re t o m an u f a ct u re st ee l in D u l u th th a n in
Pitt sb u rgh Thi s he i n tim at e d m a de it i m po ss ib le t o
.
, ,

e st ab li sh a b a s e a t D u l u th T h e inf eren ce w a s that t h e .

St eel C o rp orati o n cou l d n o t m an u fa ct u re st eel pro fitab ly

in D u l u th with a Du l u th ba se H owever n o proof o f thi s .
,

was o ffere d T h e Su peri or C o m m e r ci a l C lu b ce rt a i n ly d o e s

.

n o t a d m it th a t it co sts 1 3 pe r cent m o re t o m anu fa ct u re stee l

in D u l u th th a n it d o es t o m anu fa ct u re it in Pitt sb u r gh b u t , ,

f or t he s ake o f argum e nt we m ay t e m pora rily a s s u m e th a t ,

it d oe s In th at ca se it seem s cl ear t o u s that th e l ogi cal

.

thi ng t o d o wou l d b e t o charge f o r the s t ee l m anu f a ct u re d

a t D u l u th s u ch a pri ce a s wo u l d c o ve r t h e cos t o f m an u f a c
tu ri n g plu s a reas onab le a n d indee d a li beral profit Then
, , ,
.

if t h e st ee l were shi ppe d a way from D u lu th t h e a ct u al co st

o f tr an s p o rtin g it s h ou l d b e a d de d Bu t we can n ever a d m it .

that su ch tra n s po rtati on co st sh o uld b e a dde d when n o

s ervi ce of tran s port ati on i s a ctu ally re n dere d .

N ow s u pp o se w e a cce pt J u d ge G ary s o wn intim a ti o n

’
,

in re gard t o th e co st O f m a n uf a ctur e wh at d o we fin d ? We ,

fin d th at in norm a l t im e s t h e co s t o f m anu fa ct u rin g r o ll ed

s teel d oe s n ot e x cee d $ 20 a t o n N o w 13 pe r ce n t o f $ 20 i s .
,

Thu s it wo uld s eem f air a ccord in g t o J u dge G a ry s ,

’

o w n a rgu m e n t th at th e p e o pl e o f t h e D u l u th d i stri ct s h o u l d
,

p ay a t o n m ore f or th e ir st e e l th a n t h e pe o p l e o f t h e
Pitt sbu rgh d i s tri ct Bu t w e fin d a s a m a tt e r o f f a ct that
.
, ,

th e s t e e l c o r p o ra ti o n i s cha rgi n g t h e p e o pl e o f t h e D u l u th
d i stri c t a t o n m o re th a n it i s ch a r gi n g t h e p eo pl e o f
.
.

th e Pitt sb u rgh di s tri ct A cco rdi n g t o J u d ge G ary s o w n ’

.

a rgu m en t th er ef o r e t h e p e o pl e o f t h e D u l u th d i s tri ct a r e
, ,

b e i n g o ve r ch arge d t o t h e e x t ent o f a t o n a t t h e p re s ent

ti m e .

Bu t let u s an a lyz e J u d ge G a ry s a rgu m ent f u rthe r He

’
.

s ay s th e co s t o f m an u f a ct u ri n g s t e e l i n D u l u th i s 1 3 pe r
c e n t grea t e r th a n i n Pitt s b u rgh 38 p er ce n t gre at e r th a n in ,

G ary I n d a n d 3 9 p er ce n t gr ea t e r th a n in Birm i n gh am Ala

,
.
, , .

He f u rth er st a t es th a t a D u lu th b a s e c an n o t b e e st ab li she d
b e cau se t h e co s t o f m an u fa ct u ring in D u l u th i s 1 3 pe r cent
grea t er th an in Pitt sb u rgh It will re ad ily b e s een th at t h e
.

j u dge prove s t o o m u ch a n d th at his argum ent defeat s it self

,
.
 PRI C E P O LI C I E S 3 07

A cco rding t o hi s o wn st at em ent th e co s t o f m anu fact ur in g

,

in Pittsb u rgh i s a b o u t 25 pe r c en t great e r th an in Birm i n g

h a m o r G a ry . N o w if a d i fferen ce o f 25 p e r c e n t d o e s n o t
,

i n terf ere wi th t h e e s t a bli s hm e n t o f a Pitt s bu rgh b ase h o w ,

ca n a d iffer e n ce o f 1 3 p e r c e n t be twe en Pitt s b u rgh a n d

D u l u th whi ch i s o n ly h al f a s gr ea t a s t h e d i ff e re n ce be twee n
,

B irm i n gham a n d Pitt sb u rgh prevent th e e st ab li shm ent o f

,

a D u l u th b a s e ?
Bu t wh il e th e peo pl e w h o li st e n e d t o J u d ge G a ry i n
D u lu th u n d e rs t o o d h im t o s ay th a t t h e c o st o f m a n u fa ctu ri n g
in D u l u th i s 1 3 p er cen t gre at er tha n in Pitt sb u rgh th e ,

print e d p am phl e t whi ch h e l a t e r i ss u e d c o n t a i n in g his

D u l u th ad d re ss i n di ca t e s tha t hi s D u l u th h e arer s d id n o t
e xa ctly u n d e r s t a n d hi s s t a t e m ent in r e gar d t o t h e r e l a tive
c o st o f m anu f a ct u re in Pitt sb u rgh a n d D u l u th . T h e p rinte d
re port o f t he s pee ch i ssu e d by t h e j u d ge hi m se lf s t at e s tha t
th e D u l u th pl a n t i s m o re u p t o d at e a n d b e tt e r e q u i p pe d
than the Pitt sb u rgh pla n t s a n d th erefo re m o re e ffi ci e n t
,

tha n th e Pitt sbu rgh pl a n t s In fa ct in th e D u l u th a dd re ss

.
,

J u d ge G ary s t ated tha t th e D u l u th l ocati on wa s n o t o n ly

t h e m o s t b ea u ti fu l b u t a l s o t h e m o s t p ra cti ca l s it e f or a
,

s t ee l pl ant o f a n y in t h e wo rl d Then J u d ge G a ry st a te d
.

that it wou ld co s t 1 3 pe r cent m ore t o m anu fa ct u re in D ul u th

than in Pitt sb u rgh with plant s o f e qu al e ffi cien cy Wh a t .

t he act u a l diff ere n ce in c o s t o f m anu fa ct u ring m ay b e b e

twe en Du lu th an d Pitt sb u rgh th e print ed report o f J u d ge
,

G a ry s a dd re ss l ea ve s u s t o c o n j e ct u re a n d it i s t he o pin i o n
’
,

O f t h e Su peri o r C o m m e r ci a l C l u b th a t t h e co s t o f m a n u
f a ctu r in g st ee l in D u l u th s h ou l d b e le ss th an it is in Pitt s
b u rgh T h e rea s on s f or thi s o pini o n m ay be st at ed bri efly as
.

f oll ow s :
T o m anu fa ct u re a t o n o f th e o rd i n a ry ro ll ed st eel re qu ire d
2 t on s o f 50 p er cen t iro n o re a n d 1 % t o n s o f co a l In o rd i
.

na ry t im e s th e c o s t o f tra n sporti n g t h e iro n o re from D u l u th

o r Su peri o r t o t h e L a k e E ri e p o rt s i s a ppr o x i m at e ly 6 0 ce nts

a ton . O n th e o the r h an d t h e co s t o f tran s p o rti n g a t o n o f

,

coa l fr o m th e L a k e E ri e p o rt s t o D u l u th i s in o r d i n a ry ti m e s

a ppr o x i m at ely 3 0 c e n t s a t o n . It m u s t b e b orn e in m ind

that t he o r e f o r t he Pitt s b u rgh m ill s h a s to b e tra n s po rt e d
f ro m D u l u th o r Su pe r i o r t o t h e L a ke E ri e p o r t s w h il e t h e ,

coal u s e d in s m e l ti n g a t D u l u th h a s t o b e tra n s po rt e d f r o m
th e L ak e E r ie p o r t s t o D u l u th .It will th u s b e see n th at t h e
Pitt sb u rgh s t ee l i n vo lve s t h e tra n s p ort ati o n co s t f or th e o r e
of At th e s a m e ti m e D u l u th s t e e l i n vo lve s a tra n s
p o r t a t io n co s t f o r t h e c o a l o f n o t o v e r 4 0 c e nts . R o u ghly ,

w e fin d a s avi n g he re in fa vo r o f D u l u th s t e el o f 80 ce n t s o n
e ve ry t o n o f s t ee l m a n u f a ct u r e d T h e o th e r it e m o f im
.

o rt a n ce u s e d i n t h e m a n u fa ct u r e o f s t ee l i s li m e s t o n e a n d
p ,

we a r e re li a b ly in fo rm ed tha t t he co s t o f t ra n s po rtin g t he
308 MARK E TIN G PR OBL E M S
li m es t o n e to D u lu th i s n o great e r than i s th e cost o f trans
p o r ti n g it t o t h e Pitt s b u rgh d i s tri ct Thu s far we fin d that .

t he co n d iti on s f avo r D u l u th A n other im port a n t el em ent in

.

t h e co s t o f m a n u fa ct u re i s l ab o r It i s s tat e d b y Mr R T . . . .

Ki r kh am o f Su pe ri o r tha t c lim ati c co n diti o n s a t th e hea d

, ,

o f L a k e Su pe ri o r a r e s u ch th a t l a b o r e m pl oye d in s t e e l

p l a n t s i s o n t h e a ve ra ge a t l ea s t 10 p e r ce n t m o re e ffi ci e n t
, ,

tha n it i s in th e Pitt sb u rgh d i stri ct We kn ow f u rtherm ore .

, ,

gen t lem e n e m p l o ye d b y t h e Unit e d St ee l C o r po r ati on h ave

st at e d th at livi n g co n d iti on s in D u lu th a n d Su pe ri o r a r e
s u ch that l ab o r e m pl oye d a t th e D u l u th pl an t i s m ore co n
t en t e d than i s th e co rre s po n d ing l ab o r e m pl oyed in th e
Pitt sb u rgh d i s tri ct Thi s l eave s a s th e o n ly o ther it em fo r
.

u s t o c o n s i d e r t h e r e l ative e ffi ci e n cy o f t h e D u l u th an d
Pitt sb u rgh pl an t s an d u po n thi s w e h ave th e t e sti m ony o f
,

J u d ge G a ry him s elf wh o h as s t at e d p u b li cly th at th e D u lu th

,

p l a n t is m o re m od ern an d m ore e ffi cie nt than t h e Pittsbu rgh

p l ant s .

A pp li ca ti o ns a ls o w e r e s u b mi tt ed by th e St at e o f
M inn e s o t a a n d by T h e J o int C o m m itt ee o f C ivi c
O r ga niz a ti o ns o f D u l u th .

AP P L I CA T I O N O F T HE S O UT H E R N A S S O CI A T I O N OF
L FA B R I CAT O R SST E E
1

1 T h e So u th ern A s s o ci ati o n o f St eel Fab ri cat or s is a

.

vo l u n t ary a ss o ci a ti on o f fab ri cat or s of st e el whose a ddress ,

i s 8 7 % S o u th Fo r syt h Stre et Atlan t a G a , , .

2 Thi s a pp li ca ti o n i s f or a co m p laint t o b e i s s u ed by
.

thi s C om m i s s i on a gai n s t t h e fo llo win g p arti e s : T h e Uni t ed

St at e s St e el C or p or ati on 7 1 Br o ad way N ew Y o rk C ity ;
, ,

T h e Te n n e ss ee C o al Ir o n a n d R ailr o ad C o Birm ingh am

,
.
, ,

Ala ; T h e R e p u b li c Ir on a n d St e el C o , Birmi ngham , Ala ;

. .

T h e G u lf St a t e s St eel C o , Bir m i n gh am , Ala T h e Kn o x ville

. .

Iron C o , K n o x vill e , T enn ; an d a ll o ther s t ee l prod u cer s

.

s it u at ed o r e ngage d in i n t er st at e com m er ce, in t h e So u th

e a s t ern St at e s .

>l<

5 T h e r e s p o n d en t s h er ei n h ave b een a n d n ow a r e
.

e n ga ge d in t h e p r o d u cti o n a n d s al e in i n t er s t at e co mm er ce
o f r o l le d , s e m ifin i s h e d , a n d fi ni s h e d s t e e l , i n cl u d i n g p l a t e s ,
s h a p e s , sheet s , b ar s , wire , cott on ti e s , b arrel hoop s , a n d other
p r o d u ct s T h e a p pli can t s u b m it s th at t h e n or m al a n d
.

r eas on ab l e pri ce o f s u ch pr o d u ct s s h o u ld i n cl u d e t h e co s t
o f p r o d u cti o n , wit h t h e a dd iti o n o f a r e as o n ab l e p r o fit , b u t
w it h o u t t h e a dd iti o n o f a l arge a n d arb itr ary in cr e as e u nd er
t h e gu i s e o f a fi ctiti o u s fr ei ght r a t e o r o therwi s e .

1
Fed eral D ad s C mm issi o on : A pplicati ons , et c .
, pp 52
.
-
54 .
 PRI C E P O LI C I E S 3 09

6 . t h r ee b a s i c e l em ent s in t h e pr od u cti o n o f ir o n
T he
a n d s t e el a r e ir o n o r e c o al a n d li m e s t o n e
, All thr ee o f
,
.

the s e e l em en t s a r e f o un d t o geth e r in t he Bir m i n gham d is

tri et a co n d iti o n m ak in g f o r lo w co s t pro d u cti o n whi ch
,

e xi s t s n o whe r e e l s e in t h e U ni t e d St a t e s T h e r e s po n d en ts .

s it u at e d in t he Bir m i n gh a m d i s tri ct c a n a n d d o pr o d u ce
s t eel a n d ir o n a s ch e a ply a s t h e pr o d u cer s in Pitt s b ur gh
d i s tri ct o r e ls ewh er e I f b a sin g poin t s a r e s o u n d a n d a r e to
.

b e c o n ti n u e d th en Bir m i n gh a m h a s t h e s a m e ri ght t o b e
,

nam ed a b a s i n g p o i n t a s h a s Pitt s b u r gh a n d t he pri ce s ,

ch a r ge d t h r o u gh o u t t h e S o u th s h o u l d i n cl u d e o n ly t h e
f r e i ght r at e f r om Birm in gh a m a n d n o t t h e f re ight r at e fr o m
Pitt s b u rgh .

7 T he s o u th er n t errit o ry in whi ch t h e f a ct o ri e s of t h e
.

m em b er s o f t h e a ppli can t s a ss o ci ati o n a r e s it u at e d i s tri b u

’

t ary t o t h e m ill s l o cat ed a t a n d n e ar Bir m i n gh a m Y et t he .

re s po n d en t s a n d a ll o th er s t ee l pro d u cer s e n ga ged in i n te r

st at e co m m er ce n o m att e r where l o ca t e d s e ll their pr o d u ct s
, ,

f o r t h e Pitt s b ur gh b as e pri ce p l u s t h e a m o u n t o f t h e f r ei ght

f r om Pitt s b u r gh t o t h e p u r ch a s er T h e b as i s o f ch a r ge i s .

t h e s a m e r e gar d l e ss o f t h e l o ca ti o n o f t h e p u r ch as er ; in
,

o th e r wo r d s t h e p ri ce o f s t ee l i s i n cr ea s e d b y a l a r ge fi ctiti o u s
,

f r e i ght r a t e whi ch i s n o t i n cu rr ed o r p a i d a n d i s n o t a pr o p er
e l e m e n t in t h e p ri c e o f t h e c o m m o d ity .

8 By r e as o n o f thi s co m p e titi o n in s t e el i s n o t o n ly
.
,

l e ss e n e d b u t sti fl ed t h e co s t o f s t ee l i s i n cr eas e d b y a n
, ,

ar b itr ary a n d u n warr a n t e d a m o u n t a n d b u ye r s a n d m a n u ,

f a ct ur er s s it u at ed in a n d n ea r Pitt s b u rgh r e ce ive pr e fe r e n ce

a n d p r ot e cti o n a n d th o s e f a rth er a way a r e d i s crim in at ed
a ga i n s t u nf a irly a n d u nr e as o na b ly .

9 T o d e m o ns tr at e t h e sti fl i n g co m pe titi o n a pp li ca n t
.
,

sh ow s th a t t h e gro ss p ri ce t o p u r chas er s o f s t eel i s e x a ct ly

t h e s am e wh e th e r p e titi o n e r s b u y in Pitt s b ur gh in C h i cago
, , ,

in Bir m in gh am o r a n y o th er p l a ce ,
.

1 0 By w ay o f i llu s tr ati n g t h e a rb itrary an d un r eas o n

.

a b l e i n cr e a s e a p pli c a n t s h o w s th a t o u c ert a in gr a d e s o f
,

s tee l t h e f re i ght r at e fr o m Pitt sb u r gh t o Atl an t a i s 50 cen t s

pe r 1 00 p o u n d s w hil e f r o m Bir m ingh a m t o Atl a n t a it i s
,

o n ly 1 9 c en t s T h i s d iff er en ce o f 3 1 c en t s in f r ei ght o r
.
,

p e r t o n i s a r b it r ari ly a dd e d t o t h e pri ce o f s hi p m en t s f ro m
,

Birmin gh am a n d i s p o ck et e d b y t h e Birm i n gha m pro d u cer s .

O n m a n y gr a d e s o f s t ee l t h e a m o u n t s o p o ck et e d i s m u ch
l arger .

1 1 By w a y o f ill u s tr a ti n g t h e d i s cr im i n ati o n a p p li ca n t
.
,

sh ow s t h at s o m e o f t h e l ar ge s t a n d s tr o n ge s t co m p etit o r s o f
t h e m an u f a ct u r er s b e l o n gi n g t o a p pli can t s a ss o ci ati o n a r e
’

s it u at e d in P e n n s y lva n i a O hi o I n d i an a K e n t u c k y a n d
, , , ,

o th e r s t at e s c l o s e t o Pitt s b u r gh T h e f r e i g h t r a t e s fr o m
.

Pitt s b u rgh t o t h e po in ts in t he s t at e s n am ed a r e m u ch l o wer

3 10 MARK E TIN G P R O BL E M S
th an t h e freight r at e f r om Pitt sb u rgh t o Atl ant a t ho u gh it ,

i s n ot a s lo w a s t he fr eight r a t e f ro m Bir m i n gha m t o Atl an t a .

A ppli can t s m em b er s however a re co m pelled t o p ay t h e

’
, ,

fr e ight r at e Pitt s b u rgh Atl ant a o n st ee l pro d u ce d in Birm

,
-
,

i n gh am while their co m petit or s a r e payi n g t h e l ower r at e

,

ch ar ged f r o m Pitt s b u r gh t o th e ir p l ant s Thi s d i s crim inati on

.

in pri ce i s s u b s t a n ti a l an d s eri o u s ly h am p er s t h e b u s i n e ss o f
t h e m anu f a ct u r ers o f t h e So u the a st It ex cl u d es entir ely t h e
.

s o u thea st ern m an u fa ct ur er s fro m s om e m ark et s whi ch they

co u l d o th erwi s e r e a ch an d it a m o u n t s t o a n ar b itr ary a n d
,

u n r e a s o n ab l e p r ef e r e n ce a n d p r e t e ct ion gi ve n t o t h e r e gi o n s
o

c l o s er t o Pitt s b u r gh a t t h e e x p e n s e o f t h e r e s t o f t h e co u ntry ,

a n d m or e e s p eci ally a t t h e e x p e n s e o f t h e So u th e a s t .

Wher efor e a pp li cant r es p e ctf u lly a sk s th at thi s C om

,

m i ss i o n i n v e sti ga t e t h e m att er com pla i n ed o f a n d if u p o n ,

i n ve stigati o n t h e C o m m i ss i o n h as r e as o n t o b eli eve th er e i s a

vi o l atio n o f whi ch t h e C o m m i ss io n h as j u ri s d i cti on that a ,

co m pl a int b e i ss u e d a ga in s t r e s p o n d e n t s a n d s u ch f u rth er ,

pr o c e ed i n gs b e h a d as t o t h e C omm is s i o n m ay s eem m eet

an d p r o per .

AP P LI CAT I O N O F T H E B I R M I N G H AM C I VI C A S S O C I AT I ON
AN D T H E B I R M I N G HA M S T E E L BA S E B UR E A U
l

T he Birm in gham C ivi c A ss o ci ati o n a n d t h e Bir m ingh am

St e el B a s e B u r e au r e s p e ctf u lly m ake a pp li cat i o n t o t h e
Fed er a l Tr a d e C o m m i ss i on t o i n s tit u t e a pr o cee d ing u p o n
t h e a ll egati on s h er ei n af t er m a d e a n d t o i ss u e a c o m pl a int
d ir e ct ed a ga i n s t t h e Unit ed St at e s St ee l C o r p or ati o n an d it s
s u b s i d i ary co rp or ati o ns viz : t h e Tenn e ss ee C o al Ir o n an d
,
.
,

R ailr o ad C o an d t h e A m eri ca n St ee l a n d Wire C o a n d

. .
,

a gai n s t t h e G u l f St a t e s S t e el C o o n t h e gr o u n d s o f u nl awf u l
.
,

r estraint o f tr a de an d o f pri ce d i s cri m inatio n .

T h e st eel bill et s a n d r oll e d st ee l in cl u d in g t h e v ar i o u s

f or m s o f wir e m at e ri a l m a d e in t h e Bir m i n gham d i s tri ct b y
t h e r e s p o nd en t Uni t e d St at e s St e e l C o r p o ra ti o n an d thr o u gh
its s aid s u b s i di ary at t h e p lants in E ns l ey, B e ss e m er, a n d
Fair field , Ala , a r e p r o d u ced a t a m at eri a lly l ower co s t tha n
.

t h e li k e p r o d u ct s a r e p r o d u ced b y it s o th e r s u b s i d i ary com

p a ni es a n d by t h e s o ca ll e d i n d e p en d ent s t e e l co m p ani e s in
-

t h e Pitt s b u r gh o r e a s t er n d i s tri ct s T h e s ai d p l ant s a t

.

E ns l ey, B e ss em er , a n d Fa ir fie ld , Ala , a r e sit u at e d , r es p e c

t iv ely , ab o u t a n d 5 m il e s f r o m t h e cen t e r o f t h e ci ty
o f Bir m in gh a m , a ii d th a t a m o n g t h e f act o rs m a kin g f o r
t h e s a i d l o wer co s t of s t ee l p r o d u cti o n i n s ai d Bir m i n gh am
1
Fed e r al T r ad e C o mmi ssio n : A pplicati on s , etc .
, pp 55
.
-
57 ; 6 1 -6 2 .
 PRI C E P O LI C I E S 311

d i stri ct i s t h e pr o x i mi ty o f t h e ir o n o r e s , co al , an d li m e s to ne ,
t h e thr ee e ss enti a l r aw m at eri al s , all o f whi ch a r e within a
ra d i u s o f n ot e x ce ed in g 25 m ile s o f o n e a no ther an d in m o s t
i n s t a nces m u ch n ear er t o gether in s ai d d i s tri ct .

Ste e l p r o d u cti o n in s ai d Bir m i n gh am d i stri ct a n d a t

Alab am a C ity, Ala , ha s b een o n t h e incr eas e d u ring s ev era l
.

years p a st , an d r ecen t d em a n d h as cau s ed t he co n s tr u cti on

at Fa ir fie ld , Ala , o f a l ar ge r o lli n g m ill , a l a r ge b l o o m in g
.

m ill , a n d a l ar ge f ab ri cating p l a nt b y t h e U n it ed St at e s
St ee l C o r p orat i o n thro u gh t h e s u b s i d i ary , t h e Te nne ss ee
C o al , Iro n a n d R ailro ad C o , thi s in a d d itio n t o t h e f a ciliti e s
.

o f t h e s a m e c o r p o r ati o n co n s e cu tive ly b u ilt b y it a t E n s l ey

a n d B ess em er in t h e f o rm o f a m o d ern s t e e l p r o d u cti o n p l a n t
an d r a il m ill a t E n s l ey a n d a r o lli n g m ill a t B e s s em er T he .

s ai d p l an ts a t Fa ir fie ld hav e b een com pl eted d ur in g t h e

year 19 1 9 .

A ppli cant s ar e inf o rm e d a n d believe a n d therefore s t at e

th at t h e Un it e d St a te s Stee l C orpo rati on thro u gh it s s u b ,

s idi a ry t h e Te n nessee C o al
, , Iro n a n d Ra ilr oa d C o own s .
,

a n d c o ntro ls u pwar d o f t o n s o f iron o r e a n d

t on s o f co al s it u at e d pra cti cally a ll in wha t
,

is kn own a s the Birmi n gham di stri ct ; that a p pro xim ate ly

o n e h alf o f s a i d co a l s u pply i s o f a s u pe ri o r c oki n g q u a lity ;
-

a n d s ai d ir o n o r e i s l arge ly o f a s e lf flu xi n g qu ality a n a lyzi n g

-
,

a pp r oxi m a t e ly 38 pe r ce n t m et all i c ir o n a n d sa i d o r e is we ll
,

suit ed t o th e m anu fact ur e o f b a s i c pig iron f or u se in t he

p r o d u c ti o n o f b a s i c O-
p e n h e arth st ee l .

I f t h e p ri n ci pl e i s a cce pt ed o f fi xin g t he p ri ce o f r oll e d

st ee l in a c co rd an ce with th e la w o f su pply a n d d em an d a n d
b y d et erm i n i n g t h e co s t plu s a reas o n ab le p rofit th e n t h e ,

p r i ce o f r o ll e d s t ee l a n d b ill e t s.f o b. m. i lls in t h e B i rm i ng

h am d i s tri ct sh ou l d b e a s lo w a n d n o t hi ghe r tha n t h e pri ce

a t m ill s in a n y o th e r d i s tri ct in t h e Unit e d St at es .

9 .T o m ee t t h e s ai d Pitt sb u rgh b as e pri ce , th e re s p on d

e nt s w h o h ave m ill s in th e Birm i n gh a m d i s tri ct m ake p ri ce s
a n d s ell t o p u r ch as er s in t h e Pitt s b u rgh d i st r i ct or in t e rrit o ry
ne arer Pitt sb u rgh th an Birm i n gh am , w h o ar e co m petitor s
o f f a b ri cat o r m em b er s o f a p pli ca n t s , a t p r i ce s o f t h e Pitt s
b u rgh m ill s a n d them s e lve s ab so rb t h e f re i ght rat e s f ro m
their m ill s t o t h e pu r cha s er s pl ants , a n d thu s di s cri m inate
’

in pri ce t o th e am o u n t o f s evera l d oll ar s per n e t t o n in f avo r

o f su ch co m pe tit o r s a n d a gai n s t a ppli ca nt s sa i d m em be r s
’
.

1 0 T h e re s p o n d en t s h avi n g m ill s a t Fa irfi e ld , E n s l ey ,

.

a n d B e ss e m er d o n o t in a ll ca s e s o r u n if o r m ly m a i n t a i n o r
ch ar ge s u ch Pitt s b u rgh b a s e p ri ce , b u t h a ve pra cti ce d a n d

m ad e an d d o m ake o ther dis criminati ons in pri ce in favor

3 12 MARK E TIN G PR O BL E M S
of ce rt ain cu st om e r s in t he Birm i n gh am dis tri ct viz ,

They h ave qu o t ed a n d m a d e a n d d o qu ot e a n d m ak e p ri ce s
t o ra ilro a d co m p a ni e s f o r r ail s a ngl e b ar s a n d t ie pl a t e s an d , ,

o t h e r s t ee l ra ilr o a d e q u i pm e n t f o b Birm ingh am o r Pit ts . . .

b u rgh o r f o b m ill T h e s a i d Te nne ssee C o a l Iro n a n d

. . . .
,

R ailr o a d C o qu o t e s a n d s e ll s p ig iro n at pra cti cally t h e sa m e

.

pri ce f o b Birm ingha m a n d Pitt sb u rgh

. . . An d a ppli ca n t s .

s u b m it tha t s u ch pra cti ce s be si d e s c on s tit u ti n g d i s cri m ina ,

ti o n s i n pri ce a s a fore s a i d Sh ow that s u ch pri ce fi xing f o b

, ,
. . .

Pitt sb u rgh so lely h as n o tra de o r e co nom i c f ou n dati on .

A N SW E R O F T HE UN I T E D S T A T E S S T E E L C O R PO R A T I O N 1

T he Unit e d St at e s St e el C orporatio n C a rn egie St ee l C o ,

.
,

Illin oi s St e e l C o a n d Minn e so t a Stee l C o appe ari n g by

.
, .
,

lea ve o f t h e Fe d e ral Tr a d e C omm i ss i o n a n d re s p o n din g t o ,

th e a p pli ca ti o n o f t h e We s t ern A ss o ci a ti on o f R o ll ed St ee l
C o nsu m ers f or a com p l a i n t a ga i n s t the m a n d o the rs say ,

1 R e spo n dent United St at es St ee l C o rp orati on i s n ot

.
, ,

n ow a n d n e ve r h as b ee n e n ga ged in t h e pro d u cti o n o r sa l e

o f r o ll e d iro n a n d stee l a t G ary in th e St a te o f In di an a o r , ,

So u th C hi cago o r J o lie t in t h e St a t e o f Illi no i s ; or M ilw au

,

k ee i n th e St at e o f Wi s co n sin ; or D u l u th in t h e St at e o f
, ,

Minn e so t a ; o r Pi tt sbur gh in t he State O f P e n n sylvan i a ; o r ,

e ls ewh e re a s s t a t e d in sa i d a p p li cati o n
, Uni te d St at e s St eel .

C o rporatio n o wn s s u b st an ti ally all th e s t o ck o f th e C arnegi e

Ste e l C o whi ch pro du ce s a n d se ll s r oll ed iro n an d st ee l a n d
.
,

o ther ir o n a n d st ee l p ro du cts a t Pitt sb u rgh ; s u b s t a nti ally

a ll t h e st o ck o f t h e Il lin ois St e el C o whi ch pro d u ces an d .

,

se lls roll ed iro n an d st eel a n d o ther iro n a n d st eel pro du ct s

a t Jo ile t So u th C hi ca go G a ry a n d M ilwa u ke e ; a n d s u b
, , ,

s t an tially a ll t h e s t o ck o f t h e Fe d era l St e e l C o wh o s e .
,

s u b s i di ary th e Mi n ne s o t a St e el C o m a nu fa ct u re s a n d s ell s
,
.
,

ro ll ed ir o n a n d s t ee l a n d o th er iro n a n d st eel pro du ct s a t

D u l u th Un it e d St at e s St ee l C o rpo rati on s u st a i n s n o rel a
.

ti on t o a n y o f s ai d com pani e s e x ce pt a s s t o ckh ol de r a s

a f o r e s a i d a lth o u gh it d o e s f r o m t im e t o t im e m ake r e co m
,

m en d at io n s t o sa i d m an u fa ct ur i n g co m p ani e s with re s pe ct
t o th e co nd u ct o f the ir seve ra l bu sine ss e s a n d e x er ci s e s s u ch
c o ntro l o ve r the m a s i s i n ci d e nt t o s u ch s t o ck own e r s h i p .

2 R e s p o nd en t s Illin o i s St ee l C o an d Min n e s o t a St eel

.
,
.

C o gen er ally s e ll their p r o d u ct s o f ir o n a n d st e el a t t h e

.
,

p ri ces ch ar ged f o r s i m i l ar pr o d u ct s in t h e Pitt s b u r gh di s

tr i et f or d elivery at t h e Pitt s b u r gh m ill s p l u s a n a m o u n t ,

eq u a l to t h e f r eight o n s u ch pr o d u ct s f r o m Pitt s b u r gh t o
t h e p o int o f d e s tin ati o n Thi s i s th e pr a cti ce o f s te el m anu
.

f actu r er s gen er a lly T h e pri ces s o cha r ge d ar e n o t ar b itra ry

.

n or a r e th e y t h e r e s u lt o f a n y a gr e em e nt o r u n d er s t a n d i n g

b etwee n pr o d u cer s O n t he contrary they ar e fix ed an d .

,

Fed er al T r ade C ommi ssio n : A pp licati on s etc pp 6 4 6 7

1
,
.
, .
-
.
 PRI C E P O LI C I E S 3 13

co ntro ll ed by t he la w o f s u pply an d d em and an d a r e t he

m ark e t pri ces pr evailing in t h e t errit o ry s erve d a t t h e ti m e
o f s e rvi ce . Sai d p ra cti ce h a d it s i n ce pti o n a t t he b egi n n i n g
o f t h e s t e e l i n d u s try in thi s c o u n try At tha t ti m e n ea rly
.

a ll t h e ir o n a n d s t e e l pr o d u ce d in t h e U n it e d St a t e s w a s
m a n u f a ct u r e d in t h e Pitt s b u rgh d i s tri ct a n d t h e Pitt s b u rgh
m ill s co n tr oll ed t he pri ce as a m att er o f co u r s e Si n ce th at
.

ti m e m any m i lls h ave b e en e st a b li s he d in d i ff ere n t p art s o f

t h e co u n try o u t s i d e o f t h e Pitt s b u rgh d i s tri ct l a rgely in ,

what i s kn own a s t he C hi cago d i s tri ct Su c h m ill s however .

, ,

h ave neve r b ee n a b l e to s u p ply t he r e q u ire m e n t s o f t he

t errit ory trib u t ary t heret o t he m aj o r p a rt t hereo f havi n g
,

a lway s b een s u p pli e d b y t h e Pitt s b u r g h m il ls As a c o n.

s eq u en ce co ns u m er s wit hi n s u ch t errit o ry ha ve b ee n o b li ge d
t o d e p e n d u p o n t he m an u f a ct u r er s in t h e Pitt s b u rgh d is ~

t r i et f or t he l a r ger p art o f t h eir s u ppli e s a n d fo r t hi s r eas o n

,

t h e pr acti ce o f s e lli n g a t t h e pri ce s c h arge d b y t h e Pitt s b u rgh

m a n u fa ct u rer s p l u s f rei gh t f ro m Pitt s b u rgh h as b ee n
co n ti n u e d d own t o t h e p r e s e n t ti m e .

3 T h e pr acti ce o f s elli n g at t h e Pitt sb u rgh b as e pri ce

.
,

p l u s f r ei ght h as n o t h oweve r b een ad h er e d t o a t a ll ti m e s o r

, ,

u n d e r a ll cir c u m s t a n ce s Wh en t he d em an d h as e q u al ed o r
.

e x cee d e d t h e s u pply it h a s ge n er a lly b ee n fo ll o we d b u t wh en ,

t h e d em an d h a s l e ss en e d an d t h e s u pply h as m at e ri ally
e x ce e d e d t h e d e m a n d a n d p arti c u l arly w h en t h e p r o d u cti on
,

in t he d i stri cts o u t s i d e o f Pitt s b u r gh h a s e q u a l e d o r e x ce ed ed

t h e r eq u ir em e n t s o f s u ch d i s tri ct s littl e a tt e n ti o n h a s b ee n
,

p ai d t o t h e Pitt s b u r gh pri ce a n d t h e fr ei ght ch arged fro m

,

Pitt sb u rgh h as e ither b een o m itte d a lt o get h er o r gre atly

r ed u ced f oll owing aga in t h e la w of s u pply a n d d em and in
,

t h e t errit o ry s erve d .

4 T h e pr acti ce a b o v e d e s crib e d l o n g s i n ce b e ca m e an d
.

s til l r e m ai n s a s ettl ed c u s t o m in t h e tr a d e T h e b u s i n es s o f
.

pro d u cer s a n d co ns u m er s h av e b e en arr a n ged m a n u fa ct u ri n g ,

a n d f ab ri cati n g p l a n t s h av e b ee n l o ca t e d an d v a s t i n ve st
,

m e n t s o f ca pit al h av e b e e n m a d e in r e li an ce u po n it To .

c h ange s u ch p r a cti c e b y o r d e r o f t h e C o m m i ss i o n o r in a n y

o t h e r w ay th a n b y t h e o r d i n ary p ro ce ss e s o f tr a d e wo u l d
cr e a t e gr e a t co n f u s i o n in t h e i n d u s t r y a n d c a u s e i n c al c u l a b le

l o s s to a l arge n u m b er o f co ncern s e n gage d in t he b u s i n e ss ,

a n d r e s p o n d e n t s s u b m it s h o u l d n o t b e a tt e m pt e d
, ,
.

5 R e s po n d en t s f u rth e r s u b m it t h at t he d et er m i n a ti o n
.

a s t o wh e th er C hi c a go s h a ll b e a b a s in g p o in t in fi x in g t h e
m an u fact u rer s pri ce for ir o n a n d s t ee l wo u l d n ece ss ar ily
’

invo lve t h e d et er m i n ati o n o f t he pri ce a t whi ch s u ch m an u

f a ct u re r s s h all s ell th eir pr o d u ct s a n d tha t s u ch d et e r m i n a
,

ti on i s b eyo n d t he po wer s con f erre d u po n t he Fe d eral Tr ad e

C o m m i ss i o n b y la w T o m er e ly o r d e r t h a t t h e C hi cag o
.

m an u fac t u re r s s h all s ell s u ch m a t eri a l s as th ey m an u fact u re

3 14 MARK E TIN G PR O BL E M S
at a C hi cago b a s e p r i ce , with o u t fi x in g s u ch p r i ce , wo u l d b u t
re q u ire a cha n ge in t h e n am e b y whi c h t he tr an s actio n i s
d e s cri b ed wit ho u t a ff ectin g in an y w ay t h e s u b s t an ce th er eo f .

6 R es p o n d e n t s f urt h er s u b m it t hat C hi ca go c o u l d n ot
.

p ro p erly b e m a d e a b as i n g p o i n t f o r t h e s al e o f iro n a n d s t e el
u n d er p r e s e n t c o n d iti o n s . Pitt s b u rgh i s an d wil l co n tin u e
t o b e t h e b a s i n g po int f o r s u ch pr o d u ct s in t h e s en s e t h at it
co n tr o l s a n d wil l co n tin u e t o c o ntr o l t h e p ri ce o f ir o n a n d
s teel thro u gho u t t h e co u nt r y s o l on g as t h e co u n try i s
d ep en d ent u p o n it f or a s u b s t a n ti al p orti o n o f it s s u pp ly .

It m ay b e , as cl ai m e d in s ai d a p pli cati o n , that t he great e s t

n o r m al gr owth an d i n cr e as e in ir o n a n d s t e el p r o d u cti o n

u n d er p e a ce co n d iti o n s will n at u r a lly a n d n or m ally b e in

a n d a b o u t C hi ca go , a n d it m ay b e th at a t s o m e f u t u r e ti m e
th e C h i cago d i s tri ct will l ea d in t h e pr o d u cti on o f ir o n a n d
s t eel in thi s co u ntry Wh en that ti m e arrives , if it ever
.

d o e s arrive , t he prim a cy w ill p ass t o C hi ca go , an d it will

b e co m e t h e b a sing p oi n t witho u t t h e o r d er o f an y l egi sl at u re
o r c om m i ss i o n a n d with o u t t h e p ower o f a n y p er s o n t o p r e
ven t it Un til th at tim e a n d s o lo n g a s C hi cago i s o nl y ab l e
.

t o m an uf a ct u r e l e ss than h al f o f wh a t it cons u m e s , it i s i d l e
re s p o n d en t s s u b m it , an d co n tr ary t o a ll e co n o m i c laws t o
ins is t t h a t it s h all b e m a d e a b a s in g po i n t C hi cago pr o
.

d u cer s can n o t b e e x pe ct ed , n or s h o u l d t h ey b e r eq u ir e d , t o
s ell t heir pro d u ct s in an y l o cality at l ess than t h e m ark et
pri ce p r eva il in g in s u ch l o cality , o r at a s u b s t anti al ly l e ss
pri ce than th eir c u s t o m er s in s u ch l o ca lity ar e o b li ge d t o p ay
t o o ther pr o d u cer s f o r t h e m aj or p art o f th eir r eq u ir em en t s .

7 R e s po n d e nt , Uni t ed St at e s St eel C o r p or ati on , d en i e s

.

th at it d i s cri m i n at e s b etwe en t h e p u r cha s er s o f ir o n an d

s t ee l in t h e Pitt s b u r gh a n d C hi ca go d i s tri ct s within t h e
m ean in g o f s e cti o n 2 o f t h e C layt o n Act . A ss u min g ( al
t ho u gh s u ch is n ot t h e f a ct ) that it s ell s in t h e Pitt sb ur gh
d i stri ct wh at i s th er e s o l d b y th e C arnegi e St ee l C o , an d in .

t h e C hi cago d i s tri ct wh at i s th er e s o l d b y t h e Illi n o i s St e el

C o , it s ays th a t s u ch s a l e s ar e m a d e in ea ch d i stri ct t o p u r
.

ch as er s o f t h e s a m e cl a ss a t t h e s a m e p ri ce a n d a r e m a d e in
e a ch d i s tri ct a t t h e m ark e t p ri ce s ther e pr ev a ilin g . Iro n
a n d s te e l a r e s o l d ge n er a lly t o t h e m an u f a ct u r er s o f a gri
c u lt u r a l i m p l e m e n t s , a n d s t e e l r a il s a n d a cce ss ori e s a r e s o l d

t o t h e r ai lr o a d s o n a d i ff er en t b a s i s an d , in t h e cas e o f s o m e
arti cl e s , a t a l ower pri ce tha n t o o th er c o ns u m er s T he
.

u s ers o f s u ch s t eel , h owev er , a r e n ot in com p etiti o n with

a n y o th er cl a ss o f u s er s , a n d t h e p r acti ce n eith er l e ss ens
c o m p e titi o n n o r t e n d s t o cr e at e a m o n o p o ly .

8 R es p o n d ent s d e ny th at t h e c h ar ging of a gr eat er pri ce

.

f o r st eel pr o d u ct s in t h e C h i cago d i stri ct t h an i s char ged f or

like p ro d u cts in t h e Pitt s b u rgh d i s tri ct un d er t h e cir cu m
s t a n ce s a b o ve s et f orth am o u n t s t o unf a ir tr ad i n g within t h e
 PRI C E P O LI C I E S 3 15

m ean in g of t he fif th s e cti o n o f t he Fe d er al Tr a d e C o m
m i ss i o n Act . T h e u nf air tr a d in g pr ohi b it e d in th at s e c ti o n
i s s u ch as t end s t o t he inj u r y o f c o m petit o r s , n o t c u s t o m er s ,
a n d it i s n o t s u gge st e d t h a t t h e p r a c ti c e c o m p l a i n e d o f i s o f

that ch aract er M or eo ve r , s u c h pra cti c e o pe r a t e s t o t he

.

b e n efit o f t h e c o n s u m er s o f s t ee l , with o u t r e gar d t o th e ir l o ca

ti o n , as it give s them t h e b en efit o f t he co m petiti o n o f t he
m an u f a ct u r er s o f t h e wh o l e c o u n try , whe r ea s if t h e c o u r s e
i ns i ste d u p o n by t he a pp li can t s sh o u l d b e a d o pt e d c o m p et i
ti o n b etwe en l o ca liti e s wo u ld t o a l arge e x t en t , if n o t a lt o
ge th e r , b e d e s tro ye d . N o r i s t h e c l a i m th at t h e C hi c a go
f a b ri cat or s ar e pr eve n t e d b y t h e p r a cti c e in q u e s ti o n f r o m
c o m p e ti n g with t h e Pitt s b u r gh f a b ri ca t o r s in t h e l a t te r s
’

t errit o ry a s u b s t anti al o n e . T h e f a b ri c a ti n g b u s in e ss is
e ss e nti a lly l o ca l i n c h a r a ct e r o n a cco u n t o f t h e hi gh f re i ght

r at e o n f a b ri cat e d m at e ri a l b e c a u s e o f it s b u lk T h e C hi cago .

f a b ri ca t or s th ere fo r e c o u ld n o t s u cce ss f u lly co m pe t e with

t he Pitt s b u r gh f a b ri ca to rs in t h e l at t er s t e rrit o r y , e ve n if
’

t h e co s t o f ro ll e d s t ee l w as t he s a m e in e a ch l o ca lity .

9 Wh il e r e s p o n d en t s co n c e d e t h e j u ri s d i cti o n o f th e
.

C o mm i ss i on t o d et erm i n e a n y q u e s ti o n o f d i s cri m i n ati o n

a r i s in g u n d e r t h e s eco n d s e cti o n o f t h e C l ayt o n A ct a n d a n y

q u e s ti o n o f u n f a ir m eth o d s o f c o m p e titi o n a r i s i n g u n d e r t h e
fif th s ecti o n o f t he Fe d er a l T r a d e C o m m i ss i o n A ct , th ey
d e n y t h e j u ri s d i cti o n o f t h e C o m m i ss i o n t o fix t h e p r i ce s a t
whi ch s t eel pro d u ct s shall b e s o ld o r t o d e t erm i n e wh e th er
Pit t sb u r gh , C hi cago o r a n y o th er p oi n t s hall b e a b as i n g
p o i n t u p o n whi ch s u ch pri ce s s h a ll b e m a d e A s t o t h e a ll e
.

ga t io n s o f d i s cri m i n a ti o n a n d u nf a ir m e t h o d s o f co m pe titi o n ,

re s p o n d en t s s u b m it th at t h e pr acti ce s h e r ei n b e fo re d e s cri b e d
d o n o t i n v o lve e ither , a n d d o n o t t e n d t o s u b st a n ti a lly l e ss e n
co m p etiti o n o r t o cr e a t e a m o n o p o ly in a n y li n e o f c o m m e r ce .

1 0 R e s p o n d e n t s r e s p e ct f u lly s u b m it th a t t h e a p pli c ati o n

.

f o r a co m pl a i n t s h o u l d b e d en i e d .

AN SWE R O F TH E ST E E L A N D T U BE C0 . O F A ME R I CA
'

1°

2 .T h e s ai d m e th o d o f fi x i n g pri ce s i s n o t t he r e s u l t o f
a n y a gr ee m e n t , o r o f a n y u n d e r s t a n d i n g a m o u n ti n g t o a g r e e

m e n t , b e t w e e n t h i s r e s po n d e n t a n d o t h e r pr o d u ce r s o f s t e el .

in o r d er t o m ai n t a i n p ri ce s o f s t eel , e it he r in t he s o ca ll e d -

C hi ca go d i s tri ct o r e l s e wh e r e , o r fo r a n y o t h e r p u r po s e .

N o s u ch u n d e r st a n d i n g o r a gr e e m e n t e x i s t s o r h as e x i s t e d .

T he s a i d m e t h o d w a s a n d i s a n at u r a l a n d n e ce ss a r y i n ci d e n t
t o co m p e titi o n i n t h e s t ee l i n d u s t r y T he s t e e l i n d u s t r y ,
.

p r a cti cally , h ad it s o r i gi n in t h e Pit t s b u r gh d i s tri c t , w hi c h a t

a ll ti m e s h a s pr o d u c e d a n d s till d o e s pr o d u c e m u ch t he

1 o
Fe d e r al T r ad e C m m iss i on : A p plic at i o ns , e tc .
, pp . 6 8 -7 0.
3 16 MARK E TIN G PR O BL E M S
l arge r part o f t h e s teel m a de in t h e e n tire co u ntry a n d it s
p r o d u c t i s s o l d t h r o u gh o u t t h e c o u ntry T h e. m a n u fa ct u r er s

o f s t e el in t h e C hi ca go d i s tri ct as r e s po n d e n t i s i nf or m e d
,

a n d b e li ev e s h av e in t h e p a s t p r o d u ce d a n d d o n o w p r o d u ce
,

m u ch l e ss th a n o n e ha lf o f t h e s t ee l r eq u ir e d t o m ee t t h e
-

d em an d s o f co n s u m ers in th a t d i s tri ct T h e l arger p a rt o f

.

t h e nee d s o f c o n s u m er s o f s t eel in s ai d d i s tri c t i s s u p p li e d

fro m t h e Pitt s b u rgh d i stri ct a n d a s a n e ce ss ar y c o n s e q u e n ce
,

t h e m a rk e t p ri ce withi n t h e C h i cago d istri ct i s gen er ally t h e

Pitt s b ur gh pri ce wit h f r ei ght f r om Pitt s b u r gh a d d ed It i s .

s u b m itt e d t h at th ere ca nn o t b e t w o m ar k et pri ce s f or s t eel

p r o d u ct s in t h e C hi c a go d i s tri c t o n e a p,p lyi n g t o st ee l p r o
d u ce d in th at d i s tri ct a n d a n o th er t o s t eel pr o d u ce d in
Pitt s b u r gh a n d s hi p pe d i n t o that d i stri ct a n d th a t s o lo n g
,

a s a l a r ge p o rti o n o f t h e n e e d s o f tha t d i s tri ct m u s t b e s u p

p li e d f r o m t h e Pitt s b u r gh d i s t r i ct t h e m arke t p ri ce will ,

t hro u gh t h e nat u r al o p er ati o n o f t h e l aws o f tra d e b e gen ,

e r a lly t h e p ri c e at whi ch t h e Pitt sb u r gh p r o d u ct i s d e liv er e d

in t h e C hi ca go d i stri ct .

Whil e gen er ally t h e pri ces in t h e C hi cago d i stri ct a r e

b a se d o n Pitt s b u rgh pri ce s t h e pri ce s m a d e b y t h e m ill s in
,

t h e C hi ca go d i s tri ct v ary f r o m ti m e t o ti m e in a c co r d an ce ,

with t h e r elati on o f t h e s u pply t o t h e d em and in t h at

d i s tri ct .

3 T h e u s e of t h e Pitt s b u rgh b as e b y s t ee l m a nu f act ur er s

.

i s b u t a m etho d o f arriving a t t h e pri ce at whi ch t h e m an u

f a ct u r er will m ark e t hi s p r o d u ct whi ch i s in c o nf o rm ity wi t h
, ,

c o n tr o ll e d b y a n d s u b j e ct t o t h e la w o f s u p p ly a n d d e m a n d
,
.

T h e e s t ab li shing of C h i cago a s a b a s i n g p o i n t b y t h e C o m
m i ss i o n a s i s s u gge s t ed in t h e a p pli cati o n wo u l d b e a n
, ,

att em p t ar b itr a rily t o fix p ri ce s in d i s r e gar d o f t h e n at u ra l

“
,
”
a n d n o r m a l f o r ce s gov er ni n g s u pp ly a n d d em an d to u se
,

t h e l a ngu age o f t h e a pp l ica ti o n . It wo u ld h av e t h e n e ce ss ary

e ff e ct o f l e ss en ing co m p etiti o n B u t t h i s r e s p o n d e n t su b
.

m it s th a t it i s n o t within t h e p ow er o f t h is C o m m i ss i on t o fix
pri ce s t o b e o b s erv ed b y t h e m an u f a ct u r er s e ith er b y ,

e s t ab li shi n g C hi cago a s a b a s in g p o i n t or by a n y o th er
m e th o d s .

4 P a ragr a ph 7 o f t h e a pp li ca ti o n a ll e ge s th a t if t h e u se
.

“
o f t h e Pitt sb ur gh b a s e i s a b a n d o n e d t h e s u p p ly in s u ch
C hi ca go d i s tri ct o f r o ll e d s t ee l a n d r o ll e d st e e l p ro d u ct s
”
will a cco mm o d a te it s elf t o a n d m ee t th e d em an d therefor .

It i s n o t re a s on ab l e t o a ss u m e that th e d eve l opm e n t o f th e

s t e e l in d u s try in C hi ca go will b e sti m u l a t e d b y r e m o vi n g
t h e a d va n t age it h o w h as ari s i n g o u t o f it s pro xim i ty t o it s
,

chi e f m arke t . It wou l d s eem th at th e n at u ra l e ff ect wo u l d

b e t o ch e ck s u ch d e ve l opm e n t Bu t h o weve r th a t m ay b e
.
, ,

t h e i m p li e d a d mi ss i o n th a t t h e C hi ca go m ill s ca nn ot n o w
su pply t h e dem an d s o f th e d i s tri ct m akes it c ert ai n that t he
 PRI C E P O LI C I E S 3 17

m a rket pri ce u n de r pres ent co ndi ti o n in th a t di s tri ct ca n

o nly b e d e t erm in e d b y t h e o pe rati o n o f t h e la w o f s u pply
a n d d e m an d .

5 T h e e recti o n o f s t ee l pl ants in t h e C hi ca go d i s tri c t

.
,

involving inves t m ent o f a l a rge a m o u n t o f c a pit al , wa s in

l a rge m eas u re d u e t o the a dva n ta ge gaine d by nearn es s t o
t h e m arke t t o b e s u ppli e d It wo u l d b e b o th u nfa ir a n d
.

u n econ o m i c f o r thi s C o m m i ss i o n , if i t h a d t h e p owe r t o d o s o ,

whi ch thi s re s po n dent d e n i e s , t o co m pe l re s po n d e n t a n d

o th e r m anu fact ur e r s t o f ore go thi s n at u r a l tra d e a d va n t a ge .

8 M u ch t h e m a j o r po rti o n o f th e r oll e d s t ee l pr o d u c t s
.

o f th e re s po n d ent i s in th e f o rm o f pi pe a n d t u b i n g R e s pon d .

e n t i s t h e o nly m an u fa ct u re r o f s u ch p i pe a n d t u b i n g in t h e

C hi ca go d i s tri ct .It s u ppli e s , h owe ver , b u t a s m all p a rt o f

th e p i pe a n d t u bi n g u s e d a n d s o l d in s a i d d i s t ri c t , t h e la rger
p o rti o n th ereo f b e i n g f u rn i she d fro m t h e Pitt s b u rgh d i s tri ct .

T h e pri ce a t whi ch it s e ll s i s a n d m u s t h e , th e re fo re , t h e
p ri ce m a d e by m anu fact u re rs o f t h e Pitt s b u rgh d i s t ri ct .

It i s the re fore su b m itt e d tha t if thi s C omm i ssi o n h a s a n y

p o we r , wh i ch i s d en i ed , t o re qu ire t h e s a l e o f t h e pi pe a n d
t u b i n g m anu fa ct u re d by re s po n d e n t u pon a C hi cago b ase ,
s u ch powe r sh ou l d n o t b e e x er ci se d t o co m pe l re s po n de n t t o
se ll t h e com para tively s m a ll pe r cen t a ge whi ch it pro d u ce s
a t a p ri ce l e ss tha n th a t a t whi ch t h e m a j o r p o rt i o n o f t h e

p i pe a n d t u b in g s o l d in t h e C h i ca go d i s tri ct i s m ark et e d .

9 Re spo n de n t d e n i e s tha t it q u o t e s o r m a k e s , o r h a s
.

qu o t ed o r m ad e , pri ce s t o m anu fa ct u re r s o f agri cu ltu ra l

i m pl em ent s o n a n y o ther b a s i s t h a n tha t u s ed in s al es to
its cu s to m e rs gen erally As t o t h e all egati o n that it di s
.

c ri mi n a t e s in f a v o r o f ra ilr oa d co m p ani e s in q u o t ati o n s f o r

ra il s , an gle b ar s , s pli ce bar s , a n d t ie pl at e s , re s p o n de n t s ay s

it d o es n o t m anuf a ct u re o r se ll a n y o f t h e a rti cle s m e n ti on e d .

AN S WE R T o T HE IN L AN D S TE E L co .
l

T he I n lan d St ee l C o has . n o s t e e l w o rks

e as t o f the

C hi cago d i s t ri ct a n d se ll s ve ry littl e if a n y s t ee l e a s t o f
, ,

In d i an a It s n at u ra l m arke t i s we s t o f O hi o s o u th to t he
.
,

O hi o Rive r a n d th e n ce we s t t o t h e P a ci fic c o a st
,
.

Th e i ti o n a ppare n tly s ee k s t o c o n ve y t he i m pre s

a ppl ca
si on th a t th e m ain f a ct o r in t h e c o s t o f s t e el i s t h e fre i ght
rat e u p o n iro n o re This i s o b vi o u s ly m i sl e ad i n g I n t he
. .

p ro d u ct io n o
j
f p ig iro n t h e t o n n a ge o f c o a l a n d li m e st o n e

i n vo lved in t h e pro ce ss o f c o n ve rsi o n i s a p pro x i m ate ly e qu al

t o th e t o n n a ge o f o r e a n d i n t h e pro d u cti o n o f s tee l t h e
,
.

1
Fe d e r al T r ad e C o m miss io n : A pp lica tio s e t c p p 7 1 7 5
n ,
.
,
.
-
3 18 MARK E TIN G PR O BL E M S
t onnage o f co al al o n e e m ploye d in t h e p ro ce ss largely exceed s
th e t o n na ge o f o r e . T h e c o a l u se d in t h e m a n u fa ct u re o f
c o ke f o r p ig iro n b y t h e Inl a n d St ee l C o m u s t b e h a u l e d
.

t o it s pl ant f ro m t h e Penn sylva ni a a n d We s t Virgi nia fi el d s ,

a n d t h e s t ea m c oa l o b t a i n e d f ro m In d i an a a n d Illin o i s f o r
h e at m aking pu rpo s es i s m o re e x pen s ive in pro po rti on t o
-

qu a lity than i s t he co a l o f the Pitt sb u rgh d i stri ct .

M u ch o f th e e qu i pm ent m a chi n ery a n d s u pplie s u sed

, ,

in th e m an u fa ct u re o f st ee l i s pro d u ce d in qu a n titi e s o nly

in th e Pitt sb u rgh d i stri ct a n d h ave t o b e i m po rte d from th at
d i s tri ct by o u t s i d e p l ant s .

Withou t att em pti n g t o d i s cu ss t he d et ail s o f t h e co st s

in th e re s pe ctive t errit o ri e s a n d witho u t a ccu rat e kn owl e d ge
o n t h e su b j e ct t h e I n l a n d St e e l C o d e sire s t o e x p re ss it s
.

co nvi cti o n th a t p r o d u cti o n o f st ee l by e q u a l p l ant s in t h e

Pi tt sb u rgh a n d C hi ca go d i s tri cts wo u l d Show l ower co s t in
t h e Pitt s b u rgh d i s tri ct .

T h e in d u stry was fir s t e st ab li she d in t h e Pitt sbu r gh

d i stri ct M an y o f th e l a r ge pr o du ce r s in t h e Pitt sb ur gh dis
.

tr ict e n tren che d them s e lve s b y t h e a cqu ire m e n t a t a co m

p a r ativ ely e arly p eri o d o f iro n m i n e s a n d o th e r s ou r ce s o f
r a w m at e ri a l a t a pri ce l owe r tha n th a t a t whi ch si m il a r
s o u rces cou l d b e a cqu ire d when C hi cago com pe tit or s e n
t e r e d t h e fie l d
. Thi s m o re th a n o ff se ts a n y a d van t age wh i ch
t h e C hi cago d i s tri ct st ee l m a ker s en j oy i n conn e cti on with
transpo rt ati o n co s t s .

T he individu al m em bers o f the a ss o ci ati o n m a king th e

a p pli ca ti o n h a ve s eem e d gen e rall y t o h ave e n j o ye d a pe ri o d
o f gre a t p r o s p e rity d u ri n g t h e la s t fe w ye a r s T h e pu bli c
.

s t a t em e nt s o f su ch o f th em a s h a ve bee n a cce ss i b l e h a ve
shown pro fit s fav o rably com parable in p ro po rti o n t o capit al
inve st e d with t h e pr o fit s o f t h e s t e el p ro du cer s o f ar as th e
sam e ar e m a tter s o f pu bli c k n owlege .

Un der t h e pre se n t sy st em o f qu otin g pri ce s with th e ,

Pitt sbu rgh b a s e as a s tan d ard th e m em b er s o f th e a ss o ci a

,

tio n a r e e n ab le d to rea d ily co m p are pri ces q u ot ed b y st ee l

pro du cer s l o ca t e d in a n y p art o f t h e cou ntry .

I f th e u s e o f a d i fferen t b a se pri ce d id n o t m a t e ri a lly

a lt e r p ri ce s qu o t ed it wo u l d o b v i ou s ly b e u s el es s t o d i s t u rb
,

t h e pre s e n t cu s t o m .

I f in f a ct th e s t eel pro d u ce r in an y given l o ca lity u n de r

, ,

t ook t o b a se hi s pri ce s s o l ely o n co s t o f pro d u cti o n givin g ,

th e cu sto m er th e b ene fit o f all frei ght c o s t s f ro m co m pe titive

p o i n t s it i s pl ai n th a t th e re s u l t wo uld b e t o cr ea t e a l o cal
,

m o n o p oly o n b eh al f o f th e st ee l pro d u ce r 1n a n y give n l o ca lity

u ntil t h e e n tire p ro d u ct o f s u ch l o ca l pro d u ce r h a d b een s o l d .

T h ere a fter t he cu s to m e r wo u l d b e ob li ge d t o pay hi gher

 PRI C E P O LI C I E S 3 19

p rice s t o pro d u cers at o ther po int s thro u gh th e a d di ti on of

frei ght ra te s .

=l=

T he Inland St ee l C o h a s m ai n t ai n ed its co m pe titive

.

b u sine ss u n d e r co n diti o n s o f n ati o n wi d e co m pe ti ti o n It -

.

b eli eve s th a t it ca n m ai n t a i n its b u s i n e ss if s u ch c o m pe t it io n

i s l o calize d b u t it be li e ve s tha t l o caliz at io n o f c o m peti ti o n
,

wou l d b e a di s a d vant a ge a s a ga i n s t u n iver s al co m pe titio n ,

wh i ch b a s e d o n a cle a rly u n d e r s t oo d s cale o f pri ce s p r o

, ,

d u ces a b ett e r u n d er st an di n g a n d r e l ati o n shi p be twee n th e

s t e e l pr o d u cer s a n d th eir c u s to m er s .

M o reo ver t h e r esu lt s o f t h e pre s ent u se o f Pitt sbu rgh

,

a s a b a s i n g p o i n t a r e la rge ly e x a gge ra t e d in t h e a p pli cati o n

in s o f a r a s tha t p racti ce a ff ect s t he gre a t b u l k o f t h e we ste rn
a n d n o rthwe s t e rn t e rrit o ry .

T h e u s e o f throu gh ra t e s b a s ed u po n t h e pra cti ce o f

f ab ri cati o n in tra n sit a n d t h e d i ff e ren ce b etwee n throu gh
rat e s a n d t h e s u m o f l oca l rat e s in m a n y p a rt s o f t he co u n try
m i n i m ize t h e f rei ght d i ff eren ti a l a n d i n m a n y ca se s a ll wat e r ,
-

o r co m b i n e d ra il a n d wa t e r r a t e s a s co m pa re d with a ll ra il
- - -

ra t e s fro m C hi ca go t o po int s we s t le ave littl e m argi n in t h e

lo cal r a t e f ro m Pitt sb u rgh t o C hi ca go .

T h e Inl a n d St ee l C o the re fo re e x pre ss e s it s co nvi cti o n

.

t h at th e a ppli ca n t s a s well a s s t e el u se r s ge n e rally wou l d

, ,

b e qu it e a s li k e ly t o b e h a rm ed a s t o b e h elpe d b y t h e
gra n ti n g o f t h e a p pli cati o n a n d t h e I n l a n d Ste e l C o b e li eve s
,
.

that t he o b vi ou s re s u lt o f f o rb i d di n g t h e u se o f t h e Pitt s
b u rgh ba s e ra t e wou l d b e t o i n tro d u ce a l a rge e l e m e n t o f
co n fu s i o n a n d u n ce rt a inty i n t o s t ee l a n d ir o n p ri ce s whi ch

wou ld b e e s pe ci a lly i n j u ri ou s u n d er th e pre se n t cond iti on s

o f e co n o m i c u n re s t a n d u n cert a i n ty

AN S W E R O F T HE I N T E R ST A T E I R ON dz ST E E L CO .

Int erst at e Iro n a n d St ee l C o o n e o f th e re s pondent s t o .

,

the a b o ve n a m e d a p p li cati o n f o r a n swe r th ere t o s ay s :

-
,

1 R e s po n de n t i s t h e o wn e r o f a ro lli n g m ill a t E a s t
.

C hi cago I n d o f t h e type k n own a s h a n d b a r m ill s

,
.
,
At .

s ai d m ill it ro ll s s te el b ille t s i n t o Sh a pe s a n d b a r s a n d p r o
d u ce s m u ck b ar s f ro m p ig iro n a n d s cra p a n d r o ll s s u ch ,

m u ck b a rs int o iron b ar s a n d sh a pe s o r co m b i n e s s u ch m u c k ,

b ars with s cra p a n d ro ll s s u ch pro d u ct i n t o ir o n b a r s a n d

Sh ape s .Re s po nd e n t p ro d u ce s n o o the r ro lle d iro n o r s te e l
p r o d u cts a t s a i d m ill a f o re s a i d a n d p r o d u ce s n o r o ll e d iro n
,

o r st e e l p ro d u ct s e ls ewh ere in t h e t e rrit o ry r e ferre d t o a n d

d e s cri b e d a s t h e C hi ca go d i stri ct in sa i d a p pli ca ti o n f o r a
co m p l a int T h e r a w m at eri a l u se d i n s u ch pro d u cti o n i s in
.

p a rt p ig ir o n a n d s cra p whi ch re s po n de n t pu r ch a e s in th e
s
,

Fe d e r al T r ad e C o m m is sio n : A pplic at ion s e t c p p 7 6 7 8 , .

, .
,
.
3 20 MARK E TIN G PR OBL E M S
m arke t a n d d oes n o t p ro d u ce , s ell or d e al in T h e o t he r .

r aw m a t e ri al s u s e d in s u ch p ro d u cti o n a re s t e e l bill et s ,
whi ch res pon de n t pro du ce s in o pe n h ea rth f u rn a ce s in -

C hi cago , Ill Su ch st ee l b ille t s a r e likewi s e p ro du ce d fro m

.

pig iron a n d s crap , whi ch re s po n d ent pu r ch a s e s in t he m arket

an d d o e s n o t p ro d u ce , s e ll , o r d e a l i n .

Re s pon dent d o es n ot o wn o r O p e rat e a n y b l a s t f u rn a ce s

a n d d o e s n o t o w n o r u s e a n y iro n o re s i n t h e pro d u cti o n o f

iro n a n d st e e l a n d is n o t an i n t e grat e d s t ee l pro d u cer T he .

r a w m a t eri a l u s e d b y r e s po n d e nt in cl u d e s in it s co s t t o
re s po n dent a profit t o th e produ cer thereo f T he o t her .

re s pon dents t o s ai d a ppli cati on a re i n t egr at ed prod u ce rs

u s i n g ir o n o r e s a s r a w m a t eri al s .

2 R esp on dent d eni e s th a t t h e co s t o f s u ch prod u ct as

.

i s prod u ce d a t it s sa i d E ast C hi ca go , I n d , m il l i s l ower than .

t h e co s t o f S im ila r pro d u ct pro d u ced b y t h e C a rn egi e p la n t

o f t h e Uni t e d St at e s St ee l C o r po ra ti o n o r l o we r tha n t h e
co s t o f sim ilar pro d u ct p ro d u ce d a t o the r m ill s in t h e Pitt s
b u r gh di stri ct , a n d , o n t h e co n tra ry , a ver s a n d charge s t h e
f a ct t o b e tha t t h e c o s t o f t h e ro ll ed ir o n a n d s t ee l sh a pe s
an d b a rs pr o d u ce d a t it s E a s t C hi cago , I n d , m i ll ( t o whi ch .

pro d u ct s it s o u t pu t i s li m it e d ) i s su b s t a n ti a lly hi gh er than

t h e co s t o f S imi lar pro d u ct pro d u ce d by t h e C arne gi e p la n t
a n d s im i l a r m il ls in t h e Pitt sb ur gh d i stri ct T h e p r o d u ct s .

pro d u ce d by re s p on d e nt a t s ai d E a s t C hi cago m ill a r e pr o

d u ced a t hi gh co st by hi gh gr a de Skil le d wo rk m en thr ou gh
-

th e u s e o f han d b ar mill s .

T he o ther re s po n de nt s t o s ai d appli cati on an d s ai d

C arn egi e p lant o f th e Uni t e d St at e s St ee l C o rp o rati o n , a n d
o the r r du cers in t h e Pittsbu rgh d i stri ct , o perat e co ntinu ous
'

b ar m ll pg
'

>l< >l< >l<

8 Res pond ent e s t abli she d it s s ai d rolli n g m ill at E ast

.

C hi ca go I n d in 1 9 05 kn o win g it s pro du cti on co s t s wou l d

,
.
, ,

b e m at eri ally hi gh e r tha n th o s e o f m i ll s in t h e Pitt sbu rgh

d istri ct an d be li e vi n g a t t h e ti m e tha t s u ch hi gher c o st s
,

wou ld t o so m e e xt ent b e e qu a lize d in co m petiti o n in that ,

as a p ro d u ce r o f s u ch p r o du ct s in t h e C h i ca go d i s tri ct ,

re s p on d en t wo u l d b e able t o o b t ain therefo r th e Pitt sbu rgh

pri ce pl u s t h e f rei ght t o d e li ve ry p o int un til a n d u nle s s t h e
p ro d u cti o n o f t h e C hi cago di s tri ct wo u l d e qu a l o r e x cee d
t h e co n su m pti o n R e s p o nden t b eli e ve s that a lthou gh th e
.

pr o du cti o n o f t h e C hi cago di s tri ct h as greatly i n crea s e d in

re ce nt ye a rs th a t fo r m any ye ar s t h e co n s um pti on o f su ch
pro d u ct s will cont in ue t o e x cee d th e prod u cti on thereof .

1
STA T E M E N T O F S O UT H E R N BR I D G E co .

In re f erence to the questi on of ba se st ee l pri ce s we wis h

1
Fe d e r al T r ade C o m missio n : A pplication s , e tc .
, p 81 . .
 PRI C E P O LI C I E S 32 1

to e nter our prot e st

in s t t h e present pra cti ce of u s in g
aga
Pitt sb ur gh P a as a b a s ing p o in t regard le ss O f the produ c
,
.
, ,

ti on of s t ee l at a l ower o r e qu a l co st s at o the r p oint s .

At pre sent we o b t ain a cert a in pro p orti on o f o u r rolled

St ee l S h a pe s s ay 6 0 p er c e n t o r gr eat er f ro m l o ca l mi ll s in thi s
, ,

d i stri ct o n whi ch w e p ay a t t h e rat e o f Pitt sbur gh ba se pl u s

,

$ 3 per t o n .

In co m pe titio n with fab ri cat or s fro m th e Pitt s b ur gh

t errit o ry to p oi n t s n orth we a re th u s pla ce d a t a disa dvan t age ,

f o r as s u m i n g th a t o u r co s t s o f f a b ri cati o n a r e t h e s a m e a s
,

f a b ri cat o r s in t h e Pitt sbu rgh d i s tri ct we ar e h a n d i ca pp ed in ,

t h e s u m o f $ 3 p er t o n in b i d d in g o n f a b ri cat e d s t e e l wo r k t o
p o int s th a t c arry a n e qu a l frei ght rat e b etween t hi s city
a n d Pitt s b u rgh .

We tru st that aft er f u ll i n ve sti gati o n a cti on will be

t aken t o place thi s di stri ct o n t h e b as i s t o whi ch it i s e n title d .

S T AT E M E N T O F O S C AR DAN I E LS
We de s ire t o call yo u r a tt enti on t o th e m an ner in whi ch
s ou the rn Shi pb u il d er s a r e be in g d i s cri m i n ate d aga i n s t in t h e
m a tt er o f pri ce s o n st eel o wing t o th e f a ct th a t t h e f r ei ght
,

d i ffe re n ti a l betwee n Pitt sb u rgh a n d Birm i n gha m o r a po r ,

ti on o f it is a dd ed t o th e Pitt s bur gh b a s e pri ce f or all s te e l

,

e m an at in g f ro m t h e Birm i n gh a m d i s tri ct .

We at th e pre se n t ti m e have a co ntra ct with th e Shi ppi n g

B oard f o r 1 0 s te e l Shi p s f or whi ch o ver t o n s o f s tee l
were require d In b illi n g a ll s tee l r oll ed in th e Birmingha m
.

d i stri ct t h e frei ght d i ff e re n ti al be tween Pitt s b u rgh a n d

Birm i n gha m w a s a d d e d t o th e b a se pri ce Thi s a m o u n t ed .

t o b etwe e n $ 6 a n d pe r t o n o n ab ou t t on s of
m at e ri al whi ch was r o ll e d in t h e Birmi n gha m d i stri ct .

Yo u can rea d ily s ee tha t in co m pe titi o n with shi pyar d s

in th e e a s t ern d i s tri ct t he s ou thern shi pb ui l der wou ld be
h a n d i ca p p e d t o t h e e x t ent o f thi s d i ffe renti a l .

We h ave re cen tly h a d o ccas io n t o get s o m e q u ot ati on s

o n s t ee l b o th f r o m Birm i n gh a m d i s tri ct a n d Pitt s b u rgh
d i stri ct T h e qu o t a ti o n s fro m t h e Birm i n gh a m d i s tri ct o n
.

beam s were $ 3 a t o n l owe r f o b Tam pa th a n th e Pitt s . . .

b u rgh qu ot ati o n s o n p l a t e s per t o n o n b ar s

,
a ,

t on l owe r T h e f re i ght d i ff erenti al b e twee n th e s e t w o pl a ce s

.

i s $ 6 a t o n o n Sh a p es a n d o n p l a t e s e x cl u s ive o f w a r ,

t ax . It i s there fo re e vi d en t that t he pri ce o f s t eel o n th e

b as is o f the s e pri ce s i s ab o u t $ 3 hi ghe r f o b Bi rm i n gh a m . . .

th an f o b Pitt sbu rgh an d therefore a d d s thi s a m o u n t t o

. . .
,

t h e c o s t o f b u il di n g Ship s in th e s o u th ern di stri ct .

T he e s t abli shm e n t O f a b a s e pri ce f o r s t e el e m a na ti n g

in t he Birm i n gh am d i s tri ct s a m e as tha t e m a n t in g fro m the
Pitt s bu rgh d i stri ct wo u l d pl a ce th e s ou thern s hipb u ilde:
Fe d e r al Tr ade C o mmi ss io n : A p plica ti on s e t c p p 9 9 1 00
1
,
.
,
.
-
.
3 22 MARK E TIN G PR O BL E M S
on th e e qu al co m pe titive f ooti n g with th e Shi pb u il d e r s in
e a s te rn d i s tri ct , a n d t h e e s t a b li s hm e n t o f s u ch a b a s e r at e
wo u l d work n o hard shi p u po n t h e s teel m anu fact u re rs , a s
t h e co s t o f st e e l f a b ri ca ti o n in t h e Birm ingh am d i s tri ct is
lower than that in the Pitt sbu rgh d i s tri ct .

ST A T E M E N T O F T H E U N I O N C OTT O N WA R E H O U SE O R G A N I Z AT I O N
l
C O R P O R A T I ON OF DE LA W A R E

AS th e Un i o n C o tto n Wa reho u s e C o r pora ti on conte m

p l at e s t h e co n s tr u cti o n o f a ch a i n o f c o tt o n wa r eh ou s e s a t
s o u thern po i n t s invo lving t h e u s e o f co ns i d erab l e st ee l t on
,

nage w e a r e very m u ch i n t ere s t ed in t he qu esti o n o f stee l

,

p ri ce s whi ch yo u a r e a b o u t t o inv e s ti gat e A cco rd ing to .

o u r i n fo r m ati o n it will b e i m m at eri a l to u s whether we

,

o r d e r o u r st ee l r eq u ir e m ent s f r o m t h e Pitt s b u r gh o r Birm

in gh am m ills a s by r ea so n o f t he si n gle b as e a t Pittsb u rgh
, ,

p ri ce s d e liv e r ed a t a n y d e stin ati o n ar e t h e s am e as from

o th e r p r o d u cin g p o int s .

We hav e e s ti m a t ed th at if we co u l d get pri ces at th e

,

Birm ingham m ills e qu a l t o t h e Pittsb u r gh m ill pri ces we ,

wo u l d effe ct a s aving o f b etwe en an d on

t h e b a s is o f an u lti m at e a ggr egat e capa city o f

b a l es f o r ou r war eho u s es E nginee rs e stim at e th at
.

s qu are feet o f fl o o r s p ace wo u ld b e invo lved a n d tha t o n th e ,

ave ra ge 7 p o u nd s o f st ee l b ar s t o t h e s qu ar e f oo t o f b u il d i n g
s pa ce wou ld b e nece ssary Thu s with a n avera ge d i s cri m
.
,

in at io n in st e el pri ce s o f $ 3 p er t on th e trib u t e we wo u ld p ay
,

t o t h e singl e b as e sy s t em wou ld n ot b e le s s than

-

O u r u nd er s t and i n g is th a t st eel pro d u ctio n at Bir m in g

h am cos ts l e s s tha n a t Pittsb u r gh a n d if s o w e s e e n o r e as o n
, , ,

why if op en com p etiti o n exi s ted s o u thern con s um ers o f

, ,

s t ee l shou l d n ot b e en titl ed to t h e pri ces r el at e d t o their

d is t an ce f r o m Bir m ingham i ns t e ad o f a rb itrarily b e ing
,

s u b j ect e d t o t h e p en alty o f t h e fi ctiti o u s f r ei ght rat e f r om

Pittsb u r gh .

2
S T AT E M E N T OF N . a G . TA YL O R co .

R eferri n g to t h e a p pli cati o n tha t h as been fil ed with

yo u f r o m t h e We s t ern A ss o ci atio n o f R o ll ed St ee l C o ns u m er s
f o r t h e i s s u a n ce o f a co m p l a int by yo u r C o mm i ss i o n a gai n s t
t h e Uni t ed St a t e s St e el C or p o r a ti o n an d o th er st e el pr o d u cer s
regard ing t h e p ra cti ce o f s elling st ee l on a Pitt s b u r gh b a s in g
p o int b as i s w e wi s h t o go o n r ecor d a s b eing in favo r o f t h e
,

p r e s ent pra cti ce a n d o p p o s e d t o a n y change f r o m t h e m e th o d

that h as b ee n in vo gu e f o r m any year s pas t o f u s ing Pitt s
b u r gh as t h e b a s in g p o int .

We ar e ind e p end en t m an u fact u rer s lo cate d ou ts id e the ,

Pitt sb u rgh d i s tri ct an d fir m ly b e lie ve that t he d i sad vantage

,

1
Fed e r al T r ad e C o m m issio n : A pplica ti ons etc p 1 1 2 , .
, . .

2 I bi d , p 1 14
. .
 PRI C E P O LI C I E S 3 23

O f an y c han ge fr o m t h e pr es en t s ys t em wo u l d greatly o u t
we i gh an y b enefit tha t m i ght b e d eriv ed b y a b an d o nin g
Pitt s b ur gh a s a b a s in g p o i n t T h e gen er ally a cce pt ed
.

m et h o d o f u s ing Pitt s b u r gh a s t h e b a s in g p o i n t h as b een o f

gr ea t b en efit t o t h e tra d e b y s t an d ar d izi n g p ri c e s an d
greatly s i m p lif yin g t h e d e t a il s o f b u yin g an d s el lin g .

T h e Pitt s b u r gh b a s ing p lan i s n o t O b li gat ory u po n a n y

o n e a n d if a l o ca l m ill d e s ir e s t o m a k e s p eci a l q u o t ati o n s t o
,

near b y u s er s that i s their privil ege

-
.

T O ab an d on thi s u n i fo r m p ri ce b a s i n g pl an wo u l d b ri n g
-

ab o u t f ar r e a ch i n g co m p li ca ti o n s a n d d i ffi cu lti e s
-
.

We a r e s tron gly o ppo s ed ther efore to an y ch ange in

, ,

t h e pre s en t pr a cti ce .

ST A TE M E N T L
O F G U F S T AT E S S T E E L CO .
“

A ss u m i n g t h at there wer e n o st e e l wo rk s in Al ab am a ,

an d th a t a ll s t e e l m u s t b e s hi p p e d i n t o thi s St a t e f r o m Pitt s
b u r gh t h e pri ce wo u ld b e Pitt sb u r gh p l u s fr ei ght
, I f it .

were p ro po s e d to e s t ab li sh a s t e e l wo rks in Birm in gha m an d

t h e ri ght t o pr o d u ce a n d s ell s t ee l h er e Sho u l d b e c o u p l e d
with t h e o b li ga ti on t o s ell a t t he co s t o f p ro d u cti o n n o t
e x cee d i n g t h e co s t in Pitt s b u r gh wh a t i n d u ce m ent wo u l d
,

there b e to e s tab li sh s u ch work s ? E ven if t he co s t o f p r o

d u cti o n we r e a s lo w a s in Pitt s b u r gh an d t h e Bir mingh a m ,

pr od u cer sh o u l d ch ar ge t he e q u iva len t o f Pitt s b u r gh pri ce

p l u s f r ei ght t h e Bir m ingham co n s u m er wo u l d n o t b e p r e j u
,

d i ce d h e wo u l d n ot b e inj u r e d h e wo u ld b e p ayi n g t he s a m e
, ,

pri ce th at h e w as b efor e b u t wo u l d h ave t h e a d va n t a ge o f a

,

pro d u cer a t hi s d o o r w h o wo u l d r eli eve him f r o m i n v e s ti n g

ca p it a l a n d c arr ying s t o ck s a n d wo u l d gi v e h im pr o m p t
,

d elivery t o s u it hi s e x a ct r e q u ir e m e nt s a t a m o m e n t s n o ti ce
’
.

What m ora l gr o u n d ha s t h e C ivi c A ss o ci ati o n o n whi ch t o

d em and tha t t h e b u il d er o f s te el wo rk s in t h e Bir m i n gh a m
d i s tri ct Sh all f or e go a n d r e lin q u i s h a n y a d va nt a ge th a t h e
h as O b t a i n e d b y t h e l o cati o n o f hi s wo rk s in a c o n s u m i n g
d i s tri ct a n d han d o v er t h a t a d va n t a ge t o s o m e c o n s u m e r
w ho h as n ot t a k en p e r h a p s 1 p e r c e n t o f t h e ri s k s o r i n v e s t e d
l p er cen t o f t h e ca p it a l O f th e s t e e l pr o d u ce r it s e l f I sub .

m it t h a t t h e d e m an d i s n o t hi n g l e ss th an an ar b itr a r y o n e
t o t ak e a ccr u e d a d vant age fro m o n e w h o i s a p r o d u ce r a n d
h a n d it t o on e w h o i s a co n s u m er a n d w h o h a s n o t m a d e t h e
d e m an d h i m s e lf b u t i s s ati s fie d w ith hi s p r e s e n t s it u a ti o n
,
.

T h e i d e a t h at t h e Bi r m i n gh a m d i s t r i ct ca n p r o d u c e m o re
ch ea p ly a n d s e ll m o r e c h ea p ly t h a n a n y o t h e r i n t h e U n i t e d

St at e s i s e rro n eo u s a n d b a s e d u po n t r a d iti o n s o r in s o m e
c as e s f a ct s w h i ch h a v e cea s e d t o e x i s t o win g to ch an ge d,

c o n d iti o n s .

Fe d e r al T r a de C o m mi ss io : A ppli c ti on s e t c p p 1 16 1 1 7
n a ,
.
,
.
, .
3 24 MARK E TIN G PR O BL E M S
I n t h e e arly d ay s o f Bir m i n gh am 50 p er cen t o re s we re
m i n ed f ro m t h e o u t cr o p by h an dwork a n d trans p ort ed o n
a n a v e r a ge f r e i ght r a t e o f 1 2 2 c e n t s p er t o n o f
1
pou n d s
t o bla s t f u rna ce s within t h e Bir m i n gh a m z o ne To d ay tho s e .

ri ch , s o ft o u t cro p s h ave b een e ntir ely e xha u s te d a n d t h e

har d o r e i s f o ll owe d in s o m e ca se s a s d ee p ly a s t o t h e s e a
l evel o r f ar b el ow it ; an d t h e d i s tri ct i s d e pende nt u po n o r e
whi ch d o e s n ot e x ceed 3 6 p er cen t m et alli c iro n ; i s hard ;
re q u ire s m in i n g wit h power e qu i pm ent , S ingle i n st allati on s
co s ti n g in s o m e ca s e s f r o m o n e -h a l f t o thr e e q u a rt e r s o f a -

m illi on d o ll ar s , a n d af t er pro d u cti o n s u b j e ct t o a f r ei ght

rat e o f 50 cen t s p er Short t on of p o u nd s .

T h e b e s t q u a lity o f c ok ing c o a l in t h e d i s tri ct— t h e

Pratt s eam — h as b een very l argely d epl ete d , an d f ew o f t he
pro d u cers a r e a bl e l on ger t o r e ly u p o n it , b u t t h e gr e at e r
p art o f t h e m et a ll u r gi ca l f u e l p ro d u ce d in t h e d i s tri ct i s f ro m
”
b ig s e am c o al , whi ch r equ ir e s wa shi n g Altho u gh t h e .

Birm in gham d i s tri ct o n ly pro d u ce s 3 p er c ent of t h e coa l

o f t h e Un it e d St at e s , it p r o d u ce s 4 0 p e r ce nt O f t h e wa sh e d
co a l o f t h e c ou n try , t h e wa sh e r l- o s s r u n ni n g f r o m 1 2 t o 25

p e r ce n t , a cco r d ing t o t he char a ct e r o f co al an d e ffi ci en cy o f

e qu i pm en t .

T h e l ab o r of th e So u th
i s not orio u s ly l e ss e ffi ci e nt phys
ically m an f o r m an th an tha t o f t he N o rth
, , Thi s i s a d .

m it t ed ly d u e t o c li m ati c c o n d iti o ns whi ch o n t h e o th er , ,

h ad p er m it che a p er h ou s in g c lo thi n g a n d f eed ing th an in

, , ,

t h e N orth ; a n d in t h e p a s t s o u ther n l ab or w as che ap er

,
.

N ow u n d er t h e s tr a i n o f w ar m en com m and t h e sa m e
, ,

wage s r egard le ss of their e ffici ency Thi s is e speci ally s o

,
.

with r ef eren ce t o wha t i s ca lle d u ns k ille d lab o r .

T h e co s t a cco u n t s o n file with t h e Fe d er a l Tra d e C o m

m i ss i on sho w th a t t h e So u th n o lo n ge r d i ct a t e s t o th e r e s t
o f t h e Uni te d St a t e s wh a t Sha ll b e t h e p ri ce o f p ig ir o n ; it i s
n o l o n ger a b l e t o d o s o T h e Bir m in gham d i s tri ct i s han d i
.

c a p p e d in its s u p p ly O f s cr a p It can no t b y r e a s o n of t h e
.
,

inci d en ce o f r ailro a d f rei ght s b u y fro m d i s tan t north ern

,

m ar ke t s a n d b ri n g s cr a p So u th b u t t h e north ern c o ns u m er ,

c an a n d d o e s b u y s o u th er n s cr ap whi ch i s o n it s w a y t o t h e
, ,

m a rk e t A b u yer in C in cin na ti o r C hi ca go o r St L o u i s c an
. .

b u y in Bir m i n gha m a n d con vert i n t o st ee l a t t h e p o i n t o f

u lti m at e c o n s u m p ti o n I f t h e Bir m ingha m b u ye r tri e d t o
.

ret alia te h e wo u l d p ay f r ei ght o n t h e s cra p goin g So u th a n d

a ga in o n hi s s t e e l p r o d u cts go ing b a ck N o rth a n d c o u l d n o t

co m p et e .

Thu s ne ithe r in co al coke o r e p ig iron S crap o r l ab o r

, , , , ,

i s t h e Birm in gham pro d u cer in a n y w ay helpe d or a dvan t age d

o v e r his n o rth e rn c o m p e tit o r T h e o nly S ingl e a d vant age
.

that h e h as i s that h e is ne ar er t o his m arket if h e d e sir e s t o ,

co nfin e hi m s el f t o t h e s a l e o f his pr o d u ct s in t h e s ou th ern

 PRI C E P O LI C I E S 3 25

z o ne an d thi s s o l e a d va n t a ge t he C ivi c A ss o ci a t io n o f B ir m
,

i n gha m wo u ld a sk t h e Fed era l Tr ad e C om mi ss io n t o t ake

f r o m him an d pu t h im o u t o f b u sin ess .

S T AT E M E N T OF LA C KA W A N N A ST E E L co .
l

2 .L ack awann a St ee l C o gen er ally s ell s a n d s in ce its.

in cepti o n h as gener ally s old its st eel pr o d u ct s s u ch as ,

s tr u ct u ra l s h a pe s p l at e s m er chan t b ar s e t c a t t h e m arke t
, , ,
.
,

p ri ces pl u s a n a m o u nt e qu a l t o t h e p u b li s h ed t ariff r at e O f
,

f re i ght o n s u ch pr o d u ct s f r o m Pitt s b u rgh t o t he p o i n t o f

d e s tinati o n T he pra cti ce j u s t d e s crib e d i s an d f o r m any
.

ye ar s h a s b e en t he pr a cti ce o f s t eel m an u fa ct u re r s generally

a n d i s t h e gr owth a n d o u t co m e o f t h e n a t u r a l la w o f s u pp ly
a n d d e ma n d So fa r a s is kno wn t o thi s co m pa n y t hi s h as
.
,

b ee n t h e c u st o m o f t h e tr a d e s i n c e t h e co m m en cem ent o f
t h e s t ee l i n d u s try f o r t h e r e a s o n t h at d u ri n g tha t ti m e t h e
S O call e d Pitt s b u r gh d i s tri ct h as p r o d u c e d a m a j o rity o f a ll
-

t h e s t e e l p ro d u ce d b y a ll m anu fa ct u r er s in t h e Unit ed St at e s .

Un d er t hi s cu s t o m t h e c om pan y i s ab l e t o q u ot e pri ce s to
a n y p o int b y as certa inin g t h e a m o u n t o f t h e p u b li sh e d t a ri ff
rat e of f rei ght from Pitt sb u rgh t o th at p o int Ther e ha ve .

b e en cert a in e x cepti o n s t o t h e gen era l r u l e in t h e e x peri en ce

o f t h e c o m pa ny At cert ain ti m e s when t h e s u pply h as
.

e x ce e d e d t h e d e m an d t h e c u s t o m h as b een m o r e o r l e ss
,

d i sr egard ed by a ll pr od u cer s b u t a t a l o s s ,
.

3 T h e f r e i gh t f r o m Pitt sb u r gh t o a n y give n l o ca lity i s

.

n e ce ss arily an e l em ent o f t he m arket pri ce o f s t eel in t h at

lo ca lity Thi s i s s o n ot as t he r e s u lt o f a n a rb itr ary pri ce
.
,

sys tem b u t b e cau s e o f pu r ely e co n o m i c r ea s o n s as f o llows :

, ,

Unde r e x i s ti n g c o n d iti o n s it i s a fa ct t ha t t he Pitt sb u rgh

d i s tri ct s u ppli e s a gr eat er a m o u n t o f s t ee l tha n a n y o th er
d i stri ct It pro d u ce s a ppro xim at ely 7 0 p er cen t o f t h e w h o l e
.

pr od u cti o n o f t h e c o u ntry It i s a f u rther fa ct t ha t t he

.

C hi ca go a n d tri b u tary d i s tri ct s d o n o t s u pply a s u ffi ci e n t

qu a n tity o f s te el t o m e et their o wn r e q u irem en t s a n d tha t a ,

s u b s ta n ti a lly l a r ger part o f t he r e qu ir e m en t s o f t h es e d is

tr ict s i s s u p p li ed b y o u t s i d e s t eel pr o d u ci n g d i s t r i c t s -
,

a m o n g whi ch t he Pitt s b u r gh d i s tri ct s tr o n gly pr e d o m i n at e s .

Thi s b ei n g t h e ca s e t he co n s u m er in t he C hi ca go a n d trib u
,

t ary d i stri ct s m u s t fina lly in or d er t o o bt ai n hi s f u l l s u p ply

, ,

c a ll u p o n t h e Pitt sb u r gh p r o d u ce r a n d p ay t h e pri ce o f t h e

Pitt sb u rgh pro d u cer C o ns eq u en tly b y t he o perati o n o f

.
,

na t u r a l e c o n o m i c l aw s t h e m ar k e t p r i ce in t h e C hi ca go d is
,

tri et a s we ll a s e l s ewh er e i s d e pe n d en t u pon t h e a m o u nt

, ,

fo r whi ch t h e Pitt s b u r gh pr o d u ce r will s ell a n d tha t a m o u n t ,

is ba s ed in part o n t h e fr eight f r o m Pitt s b u rgh t o C hi cago

Fe d er al T r ad e C o mmissi o n : A p pli c ati on s e t c pp 1 22 1 25 ,
.
, .
- .
3 26 MARK E TIN G PR O BL E M S
or o th er d e s tinati o n Thi s wil l h ol d tr u e s o l o n g as Pitt s
.

b u r gh co nti n u e s t o have a la rger o u t p u t than an y o ther

d i stri ct .

7 T he co m pa n y f u rth er s u b m it s th a t in t he e vent o f an
.

o rd e r o f thi s C o m m i ss i o n m er e ly a b o li s h in g t h e Pitt sb u r gh
ba s e o r m ere ly d ecr eeing a C hi cago o r o ther b as e wit h o u t
m or e , t h e o nly effe ct wo u l d b e that t h e s t ee l com p ani e s
wo u ld d is continu e t he fo rm O f m ak ing their pri ces b as e d o n
Pitt sb u rgh pl u s p u b li shed tariff r at e o f fr eight , b u t wo u l d
ch a r ge a p ri ce whi ch wo u l d still b e in f a ct a p ri ce p l u s p u b

lis h ed t ariff r a t e o f f r ei ght f r o m Pitt s b u r gh , s o tha t t h e

a cti o n o f t h e C o m m i ss i o n wo u l d b e n u ga t o ry .

S T AT E M E N T O F J ON E S LA U G HL I N ST E E L CO .
1

T he J o ne s L au ghli n St ee l C o h as shi ppe d into th e

.

C hi ca go d i s tri ct a n d t h e we s t ern t errit o ry trib u ta ry there t o

f o r s e ve ra l ye ar s pa s t f r o m 25 t o 30 pe r cent o f its pro d u ctio n ,

a n d t h e p r e s u m pti o n is ot h er m ill s ha v e shi p p ed as m u ch .

It i s m ani f e s t ther efo r e tha t th e C hi ca go d i s tri ct wou ld fall

, ,

f ar short o f s u p plying its l o cal m ark et an d t he gr ea t te rrito ry

we s t so u thwe s t a n d n orthwe s t T h e general effe ct o f
, ,
.

m a k ing C hi cago a b a s ing po int wo u l d b e a d e pr e ci a ti o n o f

inve s tm ent in t h e Pittsburgh d i s tri ct a n d a call fo r n ew an d
a d d iti o n a l inve s t m e nt in t h e C hi ca g o d i s tri ct This wou ld .

m ean t e aring d own in o n e d i s tri ct a n d b u il d ing u p in

,

a n o th er with o u t cha nging t h e co u n try s t o t a l s t ee l pr o d u c

’

ti o n an d wo u ld a l s o r e s u lt I n a d e pre cia ti on in s om e cas e s

—

t h e d e s tr u cti on— o f i n d u s tri e s whi ch h av e b e en b u ilt Up in

t h e Pitts b u r gh d i s tri ct t o s u pply t h e n ee d s o f t h e ir o n an d
steel mills l o cated th ere .

T h e J on e s L au ghli n St eel C o an d a ll o ther ind e pend ent

.

st eel com pani e s wo u l d b e at a n u n fa ir d i s a d van t age if

C hi cago wer e m a d e a b a s i n g p o int , t o s ay n o t hi n g o f o th er
b a s in g p o i n ts tha t n at u r a lly wo u l d f o ll ow b e ca u s e t h e
Uni t ed Stat e s St eel C or p oratio n h as l ar ge an d co m p let e
p ro d u cin g u ni t s a t alm o st e very im p ort ant st e e l p r od u cing
p o int . I f the s e p o i n ts sh ou l d car ry th e ir o w n b as e pri ce ,
t h e o n e l ar ge s t p ro d u cer in t h e c o u ntry w o u l d h o l d a po s iti o n
O f a d va nt age in e ve ry m a rk e t a n d in s o m e , as , f o r ex am pl e ,

D u l u th , M inn ; an d Bir m i n gh am , Ala ; have n o com petiti on

. .

1
Fed er al Tr ad e C o mmi ss io n : Applications , e tc .
, pp 1 30-1 3 1.
.
 PRI C E P O LI C I E S 3 27

ST AT E M E N T O F T HE R E P UB LI C I R ON A N D ST E E L CO .
l

3 Pitts b u r gh with it s pre d o m i n a n t prod u ctio n a n d

.
,

v ari ety it s ch ea p n e ss o f p r o d u ct
, a n d a ls o b e ca u s e O f it s ,

m an y com pe titiv e p r o d u cer s h av e a l w ay s na t u r ally q u alifi ed

Pitt sb u r gh as a b as i n g p o i n t a n d fo r t hi s r e as o n t he c u st o m ,

o f s e lling s te e l f o b Pitt s b u r gh i s a n at u r a l c u s t o m a n d a n
. . .

e con o m i c n e ce ss ity .

4 It i s tr u e t ha t t h e Pitt s b u r gh b as e ha s n o t al w ay s
.

b een m aint ained b e ca u s e d u ri n g p e ri o d s o f b u s i n e ss d e p r es

s i o n a n d f o r o t h e r r eas o n s aff e cti n g d e m an d a t a n y given
,

p r o d u cing p o int wh er e s u pply i s in e x ce ss O f d e m a n d p r o ,

d u ce r s u n d e r s u ch co n d i ti o n s in o r d er t o pro t ect th eir ,

o p er a ti o n s wh e th e r l o ca t e d a t C hi ca go B u ff al o C l e ve l a n d , , ,

Yo u ngs t own o r e l s ewhe r e h ave s o l d a n d d o u b tless wil l

, ,

co n ti n u e t o s e ll a gai n a t p ri ce s w h i ch d i s co u n t Pitts b u r gh
fre i ght r a t e s a n d in f a ct with o u t pr o fit f req u en tly a t a l o ss
, , , ,

as in 1 9 1 4 a n d 1 9 1 5 a n d o th e r p e ri o d s .

5 St eel i s n o t t h e o n ly pr o d u ct en j o yin g t h e d i s ti n ct i o n
.

of h avi n g a b as e m ark et ; in fa ct t h e p r a cti c e i s q u it e co m ,

m on fo r s u ch s t ee l s u p pli e s a s s pe lt er p ig t in co k e ir o n , , ,

or e an d m a n gan e s e whi c h a r e gen er a lly s o l d as f o llows :

, ,

M angane s e f o b Atl anti c s e ab o ard , . . . .

P ig t in c i f E ngl a n d
,
. . .
,

Sp elt er f o b E as t St Lo u i s
,
. . . .
,

C ok e f o b Pitt s b u r gh
,
. . .
,

Ir on o r e f O b Lower L ak e port
,
. . .

an d in a d d iti o n to th e s e :
Fl o u r f o b Minn e a po li s
, . . .
,

Wo o l f o b B o s to n
,
. . .
,

C ott on f o b N e w O rl e ans
,
. . .
,

C off e e f o b N e w Y o rk
,
. . .
,

C o ppe r f o b N ew Y ork
, . . .
,

Plat e gl as s f O b Pitt sb u rgh , . . .

an d o th e r pr o d u ct s in a li k e m a nn er .

6 That t h e Pitt s b u r gh b a s e ha s b u ilt u p e x cess iv e pro fi ts

.

fo r t h e C hi cago di s t r i c t m il ls i s n o t i n d i ca t e d b y t h e p u b
lis h e d finan ci al st at em en ts o f t h e r e s po n d e n t co m pani e s ,

a lth o u gh it m ay b e a d m itt e d th a t th es e c o m p ani e s h a v e

e nj o yed l ar ge pr ofit s a t ti m e s b u t n o t u n f a i r ly l ar ge wh e n , ,

co m p ar e d wit h t h e e a r n in gs p u b li s h e d by o t h e r c o m p a n i e s
lo cat ed a t Pitt sb u rgh Y o u ngs to wn Jo hns to w n B et hlehe m , , , ,

a n d e l s ewher e .

8 It is f ur ther cl aim e d th at C hi cago co u l d n ot b e m ad e

.

a ba s ing po i n t e x ce pt by a n agr eem en t w h i ch co nte m pla te d

,

Fed e r al T r ad e C o m miss io n : A ppl ic ti o s e t pp 152 1 53 a n ,

c ,
. .
- .
3 28 MARK E TIN G PR O B L E M S
fi x ing a b a se pri ce b ecau s e th ere i s n o s u ffi ci ent com petitio n
, ,

va ri ety o f pro d u ct s o r t on nage t o e s t ab li sh C hi cago as a

,

b a s i n g p o i n t b y t h e f r e e p l ay o f co m p etiti o n a s i s t h e c as e ,

a t t h e Pitt s b u r gh b a s e a n d wh a t is tr u e o f C hi ca go is e q ua lly
,

tru e o f Birm in gham D u l u th C l ev el an d Yo u n gst own Bu f

, , , ,

f a l o an d o ther pr od u ci n g p o int s Th er efor e m ore than on e

,
.

b a s e i s n either pra cti cal n o r e co nom i c .

ST AT E M E N T O F AT L AN T I C ST E E L Co .
l

3k

T he Atl anti c St ee l C o is l o cat ed in Atl an t a , G a , 190

. .

m il es fr o m Birm i n gh am , Ala , t h e n e ar e s t s o u r ce fr o m
.

whi ch it can pr o cu r e it s s u pp li e s o f co al an d ir on T h e .

d i s t an ce fr om Pitt sb u r gh t o Atl ant a i s 788 m il es When .

thi s plant wa s b u ilt in 1 906 it w as con t em pl at ed that it wo u l d

h ave a n a dva n t age in pri ce o ver Pitt s b u r gh e qu al t o thi s
d i ff er en ce in fr ei ght fr o m Pitt sb u r gh t o d esti n ati o n a n d fr o m
Atl an t a to d es t in ati on For i n s t an ce , t h e r at e on nails
.

fr o m Pitt sb u rgh t o M o ntgom ery, Ala , i s 57 ce nts p er 1 00 .

p o u nd s , while t h e r a t e fr o m Atlan t a t o M o nt go m ery is 1 9

c en t s p e r 1 00 po u n d s , s o th at in s e llin g n ail s in M o nt go m ery

thi s co m p an y will ab s orb a d iffer en ce o f 38 cen ts per 1 00

po u n ds .Thi s practi ce als o a ppli es to t he othe r pro du ct s
whi ch this co m pany m ake s , viz var i ou s wir e prod u ct s .

bar s , hoo p s , b an d s , cott on ti es , et c .

Us in g Pitt sb ur gh a s a b a s ing point in s elling st eel is a

cu st o m o r p r a cti ce whi ch h a s b e en e s t ab li she d f o r m a ny

years , owing to t he very gr eat a dvant age whi ch it h ad over

o th er s e cti o ns o f t h e co u ntry in t h e as s e m b ling o f r a w
m at eri al s an d t h e o r gani z ati o n whi ch it h ad b u ilt u po n
ar o u n d it s m ills . I f it sh o u l d b e d e ci d ed th at Pittsb u rgh
ca n n o l o nge r b e u s e d a s a b as ing p o int f or s t ee l p r o d u ct s
m a d e in o th e r s e cti o n s o f t he co u ntry, it will wo rk a gr eat
hard shi p u po n thi s co m pany, if n o t t ot ally d es troy its pro p
e r ty, a m o unting t o b etwe en an d for
it is n ot in po s iti on an d p r ob ab ly never will b e to co m pet e
s u cces s fully with o th er s e cti o n s that ar e m o re favorab ly
lo cat ed with r ef er ence t o r aw m at eri al s This will al s o .

a p p ly t o a ve ry l a r ge n u m b er o f s m a ll m ill s l o cat e d in v ari o u s

s ecti on s o f t h e co u n try r em ot e f ro m t h e Pitt s b u rgh d i s tri ct
a n d whi ch n ev e r wo u l d h av e b e e n b u ilt e x ce p t f o r t h e a d v an
t a ge whi ch they gai n ed by u s ing Pitt sb u rgh as a b as in g
p o int .

T he b u il ding an d op er atio n of i s olat ed m ill s rem ot e fro m

nat ural s o urces pr ev ents co n ge s ti o n a n d e x ped it es d istr ib u
ti o n o f fi n i shed p ro d u ct s b e s i d e s off erin g to co mm u n iti e s
,

e m p l o ym e nt whi ch wo u ld n o t o th erwi s e b e t h e cas e b u t a ll ,

of t hi s has b ee n covere d in t h e r e p o rt r eferre d t o .

1
Fed e r al T rade C o mmi ss io n : A pplicati on s et c p 1 6 1 ,
.
, .
 PRI C E P O LI C I E S 3 29

l
S TAT E ME NT O F BE T H E HE M S TE E L L co .

In u sing t he Pitt sb u rgh b as e in q u oting pri ces t he ma nu

fa ct u r er si m ply s t at es t o a pro s pective cu s t om er in a giv en
t errit ory in eff e ct th at t h e pri ce o f t h e pro d uct o ff ere d i s s o
m an y d ollar s p er t o n p l u s a n a m o u n t e q u a l t o t h e f r e i gh t
b etween Pitt s b ur gh a n d t h e p o i n t O f d elive ry T he u s e o f .

thi s b a s e giv es pr e ci s ely t he s a m e r e s u lt t o c u s t o m er s as if

ea ch m a n u f act u r e r w er e t o q u o t e pri ce s f O b t h e p o i n t o f . . .

d eliv ery o r f o b m i ll s b e ca u s e in a n y ca s e t he u lti m at e

. . .
,

p ri ce w o u l d b e c o m p u t e d o n t h e b as i s o f t h e p ri ce a t t h e

m ill p l u s fr ei ght t o th e p o int o f d e livery

,
T h e O b j ecti o n t o
.

qu o ti n g pri ce s f O b t he p o i n t o f d elivery is that m an u

. . .

f a ct u rer s wo u l d h av e t o m ak e e x t en d e d co m pu t ati o ns b a s e d
o n va ryi n g f r e i ght r at e s T h e o b j e cti o n t o q u o ti n g pri ce s
.

f o b m ill i s th at s i m ilar co m p u t ati o ns wo u l d h av e t o b e

. . .

m ad e by t h e c u sto m e r s b e f o r e th ey wo u l d b e abl e t o co m
p a r e q u o t ati o ns Wit h t h e u s e O f t h e Pitt s b u r gh b a s e h o w
.
,

e v e r m an uf act u r ers can r e a d ily m ak e q u o t ati o n s a n d cu s

, ,

t om er s c an com p ar e with e q u a l e a s e t h e q u o t ati o n s o f

d iff er e nt m anu fact u r ers sin ce t h e fr ei ght fr o m Pitt s b u rgh
,

t o a giv e n p o int is t h e s a m e f o r ea ch cu s t o m er .

M an i festly if a m anu fa ct u rer in th e Pitts b u rgh d is tri ct

,

wishes t o m ak e a lo w pri ce fo r d elivery in t he C hi cago d is

tri et in o r d er t o t ak e t h e b u s iness fr o m th e m ill s in t h a t
d i stri ct a ll h e h as t o d o is t o m a k e a lo w pri ce f o b Pitts
,
. . .

b urgh His f r eed om to m ak e a lo w pri ce i s j u s t as gr eat

.

wh en t h e pri ce co ns i s t s o f a pri ce a t Pitt s b ur gh a n d t h e

fr ei ght t o t h e p o i n t o f d elivery h as t o b e a d d ed as wh e n it
co ns i s ts o f a p ri ce a t t h e po int o f d eliv ery in whi ch t h e
f rei ght i s inc l u d ed a ltho u gh n o t s h own as a s ep arat e it em
,
.

II
T he r eal q u esti o n r ai s ed by t he petiti o n i s wheth er it i s
u nl awf u l f or a m a n u fa ct u r er w h o h as m ills in b o th t h e
C hi cago d i s tri ct a n d t h e Pitt s b u rgh d i s tri ct t o s ell t h e pro d
u cts o f hi s C hi ca go m ill s in t h e C hi ca go d i s tri c t a t p ri ce s

hi gh er tha n those at whi ch h e s ell s t he p ro d u ct s o f hi s

Pitts b ur gh m ills in t h e Pitt s b u rgh d i s tri ct altho u gh t h e ,

co st o f t h e p r o d u ct s in b o th d i s tri ct s i s t h e s a m e .

A s w e u n d ers t and t h e p etiti o n a n d t h e m atte r s co m

pl ained o f t h e r e al q u e s ti on r ai s e d i s n ot t h e pr o pri e ty o f
,

u s ing t h e Pittsb u r gh b a s e in q u o ti n g pri c e s f or r o ll e d s t ee l -

prod u cts b u t is f o u nd i n t h e ch ar ge th at t h e r e s po nd e n t s
,

d i s cri m inat e in t h e pri ce o f s u ch pr o d u cts in fa vo r o f co m

pet ito rs o f m em b ers o f t he p etiti on er h e re i n w ho a r e l o cat e d
Fe der al Tr ad e C o m mis sio n : A ppl ic ati ons e tc p p 1 6 5 1 69 1 7
1
,
.
, .
-
,
"
33 0 MARK E TI N G PR O BL E M S
in t he Pitt sb urgh d i s tri ct o r t h e t errit o ry e as t of the C hi cago
d i s tri ct a n d a ga i n s t s u ch m em b er s a n d o th er co n s u m er s o f
ro lled s t eel p r o d u ct s l o ca t ed in t h e C hi cago d i s tri ct
-
.

It is a pp arent that thi s charge a ga inst United Stat es

Stee l C orpo ra ti o n in n o w ay inv o lve s t h e p ro pri ety o f t h e
u s e o f t h e Pitt sb u rgh b a s e in q u o ti n g p ri ce s b e ca u se t h e
,

re su lt wo u l d be t h e s a m e whether t h e pri ce charge d in t h e

C hi cag o d i stri ct were ( a ) th e pri ce ch a rge d in t h e Pitt sb ur gh
d i s tri ct pl u s $ 5 a s th e f re ight f r o m Pitt s b u rgh t o C hi cago o r ,

( b ) a pri ce $ 5 per t on hi gher th a n t h e pri ce f o r t he s am e

p ro du ct in t h e Pittsb u rgh d istri ct . T h e re su lti n g pri ce to
t h e co n s um e r wou l d b e t h e s am e in e ithe r c a se .

We are therefore b rou ght fa ce t o f ace with th e qu e s ti on

, , ,

w h eth er th e pra cti ce o f Unit e d St a t e s St ee l C o rp o rati o n

( treati n g t h e m a tt e r as if it owne d a n d o per at e d t h e mill s
o f its s u b si di ari e s ) in ch a rgi n g hi gh e r p ri ce s f o r it s p ro d u cts

in t he C hi cago di stri ct than it charge s in t h e Pitt sbur gh

di stri ct i s in vi o l a ti o n o f s e cti on 2 o f t he C l ayt o n Act For .

t h e rea s o n s t at e d in Su b di vi s i o n V h er eof t h e d e ci s i o n O f
,

this qu e sti on wi ll vit ally a ff e ct th e s te el m a n u f a ct ur er s wh o se

m il l s ar e in o th er d i s tri ct s an d t h e s t ee l tra d e an d bu s i n ess
general ly .

III
I f the practi ce com p l ai n e d O f be d e cl a red a vi o l ati on of
s e ctio n 2 of th e C layt o n Act t h e e ff e ct wou l d b e t o p revent
a m a n uf act u re r f r o m t a ki n g a d va nt age o f t h e f a v o rable
l o ca ti on of hi s mi lls with re s pect t o hi s com petit o rs a n d the
o pe ra ti o n o f t h e law o f s u p p ly a n d d e m an d t o fix p ri ce s a n d
,

t o re s tra i n r athe r th an p rom o t e c om pe titi on .

It s eem s t o o c lear f or argum ent that a m anu f act ure r

who s e o n ly m ill i s in t h e C hi cago di s tri ct i s fre e t o charge
a n y p ri ce h e ca n o b t a i n un d e r t h e co m pe titive c o n diti o n s

preva ili n g in tha t d i stri c t e v en t h ou gh hi s p rofit be l arger

,

than that o f t h e m anu f act u rer in t h e Pitt sb u rgh di stri ct

wh o s ell s hi s pro d u ct in th at d i s t ri ct o r in t h e C hi ca go
d i stri ct pro v i d e d o f c o u r s e that t h e e ff e ct o f a n y d is crim
, , ,

i mati on in pri ce (if it sha ll n o t b e wit h in t h e e x ce pti o n s st at ed

in s ecti on 2 o f the C layt o n Act) m ay n o t b e su b s t a ntially to
les sen com pe titi on or to t en d t o creat e a m o no po ly Pr e .

s um ab ly t h e pu r po s e O f the m anu f act ur e r in l o cating hi s m ill

‘

in th e C hi ca go d i s tri ct was t o gain a n a d vant age o ve r t he

m anu fact u re r wh ose mi lls were l o cat e d in t h e Pitt sbur gh
d is tri ct o r e ls ewhe re a t a c onsi d erable di s t an ce f rom C h i cago
an d wh o in m a king pri ce s f or th e C hi cago d is tri ct h as to
con s i d er t h e it em o f f re i ght .

It is equ ally cl ear that th e m anu fa ct u rer wh o s e m ill I s

in th e Pittsb u rgh d i stri ct is free to m ake an y pri ce th at m ay
 PRI C E P O LI C I E S 33 1

b e ne ce s s a ry t o eff e ct t h e s a le o f hi s pr o d u ct s in the C hi cago

d i stri ct un d e r t h e c o m pe titive co n diti o n s pre va ili n g in th a t
d i s tri ct , e ve n th o u gh th a t p r i ce , le ss t he f re ight f ro m Pitt s
b u rgh t o C hi cago , b e l owe r th a n his Pitt s b u rgh pri ce ,
b e cau se t he e ff e ct o f s u ch s a le s ca n h a r d ly be t o l e ss e n co m
p e titi o n o r t o t e n d to c reat e a m o n o p o ly . He i s ce r t a i n ly
free t o m ake a n y r ed u cti o n in pri ce ne ce ss a ry t o m e e t t h e
co m pe titi o n o f t h e m a n u f a ct u re r s in t h e C hi c a go d i s tri ct ,

o th e rwi se , the re wo u l d b e a r e s tri ct i o n o f c o m pe titi o n a n d

t h e m an u fa ct u re r s h a vi n g mil l s I n t he C hi ca go di s tri ct wo u l d
h ave a n u n fair a d vant age .

T h e sa m e re su lt s sh o u l d f oll ow in th e case O f a m an u f ac
t u re r w h o h as pla n t s in b oth t he Pitt sbu rgh d i s tri ct a n d the
C hi cago di s tri ct . Su ch m an uf a ct u re r Sh o u l d be f re e t o
s e cu re f o r t he pro d u ct s o f hi s mi ll in t he C hi cago d i st ri ct
t he be s t p ri ce s o b t ai na b le u n d e r t he c o m peti tive co n di ti o n s
in th at d i stri ct , e ve n tho u gh t h e pro d u ct s O f hi s mi ll in t h e
C hi cago d i s tri ct a r e s o l d a t h i ghe r p ri ce s a n d a t b e t t e r pro fit
than t he pro d u ct s o f hi s Pitt s bu rgh m ill s m arket ed in t he
Pitt sbu rgh d is tri ct .

It thu s a ppe ars th at t he d i ffi cu l ty whi ch t h e C hi cago

di stri ct fa b ri ca t o r s e x peri en ce in d o i n g b u si n e ss ou t si d e O f
the ir o w n t errit o ry i s d u e n o t t o t h e e ff e ct O f t h e u s e O f th e
Pitt sbu rgh b as e I n q u o ti n g pri ce s o r t o a n y d i s cri m i n ati o n 111
p ri ce o n t h e p a rt O f t h e m a n u fa ct u re r s a gai n s t t h e C hi ca go
d i stri ct b u t t o t h e f a ct th at the ir f a b ri cati n g p l a n t s a re
,

l o cated in th e C hi cago di stri ct whi ch d o e s n o t pro d u ce

,

e n ou gh s t ee l t o s u p ply the ir d e m a n d s , a n d t h e f a ct th a t
s t ee l shi pp e d f ro m Pitt s b u rgh ( f ro m whi ch a ve ry l arge
part o f t h e s t ee l c on s u m e d in t he C hi ca go di s tri ct m u s t
co m e ) c o st s in t h e C hi ca go d i s tri ct s e ve ral d o ll a r s m o re p er
t o n t o t h e m a n u fa ct u re r s t h a n s t e e l p ro d u ce d a t m ill s in
t he C hi ca go d i s tri c t Su ch fa b ri ca to rs a r e a b le t o co m pe te
.

in t h e C hi ca go d i stri ct o n s o m ewh a t b e tte r th a n e q u al

te rm s with t he e a st ern fa b r i cat o r s b e ca u s e t he frei ght ra t e
,

p a i d b y t he e a s t e rn f a b ri ca t o r s u p o n t h e ir fin i sh e d p ro d u ct
fro m their m ill s t o p o i n t s in t h e C h i ca go d i s tri c t i s hi ghe r
than the f rei ght rat e pai d b y t he C hi ca go fa b ri cat o r s o n the
stee l whi ch ente rs int o the ir fin i sh e d pro d u ct

A prohi biti o n agai n s t taking a dv an tage o f a favo rable

lo cati o n co u l d n o t be li m it e d t o U n it e d St a te s Steel C o r
p o r a t io n in r e s p e ct O f t h e m ill s O f it s s u b s i d i a ri e s i n t he

C hi cago di s tri ct a n d if it sho u l d b e d e ci d e d th a t n o n e o f the

,
3 32 MARK E TIN G PR OB LE M S
m anu fact u rer s in th at d i stri ct can b e all owed to t ake adv an
tage o f their f avo ra b le l o ca ti o n or , in o r th er wo rd s , that
t he o pe ra ti on o f t h e law O f su pply an d d e m an d m u st b e
restri ct ed , then si m il ar a ppli cati on s by co n s u m er s o f st eel
in o ther d i stri ct s wo u ld i n evitably follow with s i m ilar d e ci
s i o n s , a n d si m il a r c onfu si on an d d i stur ban ce wou l d re su lt
a ll o ve r t h e cou n try .

This prece d ent , o n ce e s t abli shed , c ou l d n o t b e li m it e d

in it s a p pli cati o n t o m a n u fa ctu rer s of iron a n d s t eel , b u t o n
a pp li ca ti o n s whi ch wo u l d s u re ly b e m a d e by co n s u m er s o f
o th e r p ro d u ct s wo u l d n e ces s arily h a ve t o b e a p p li e d t o o th er
m anu f a ctu rers , with th e re s u lt th at t h e n at u ra l l aws u p o n
whi ch bu sine s s h as been f ou n ded si n ce the b egin ni ng o f
civiliz ati o n wou l d b e u p s e t . T h e e ff e ct of su ch a d ecisi o n
wou l d b e far rea ching T h e a d van t age s whi ch in d u ce i n
-
.

vestm ent s in pl a n t s b e ing negatived , l o ss o f su ch inve st m ent s

t o a c on s i d erab l e e x t e n t a t l east wou l d f o ll ow an d bu siness
ch ao s m i ght we ll b e e x pe ct e d .

Asi d e fro m a n y q u esti o n o f th e l ega lity o f th e

syst em a n d o f m eth o d s o f q u o tin g p ri ce s h av e th e ,

m a n u fa ctu r e rs o f r o ll e d st e e l p r o d u c ts j u stifi e d th e
c o ntin u a n ce o f th e P ittsb u r gh b a sin g p o int s yst em as
-

a m a tt e r o f b u sin e ss p o li cy ?

202 C A I R O AC CE S S O R Y C O M P AN Y
.
—
P R I CE P O LI C Y
T h e C a iro A ccess o ry C om p a ny h a s b een o rga niz ed
by two yo un g m en fo r th e m a n u fa ct u r e o f a n ew au t o
m o bil e a cce sso ry . Th e s e y ou n g m en h av e h a d s om e
e x p eri e n ce in m a n u f a ct u rin g a n d s e l lin g b u t t h e ca p it a l
,

a v a il a bl e f o r th e ir u s e is o nly A l a rge p o rti o n

o f this will b e r e qu ir e d f or e st a blishin g t h e p l a nt a n d

f o r m ee t in g cu rr e nt e x p ense s T h e p r o d u ct th a t th e y
.

a r e t o t u rn o u t is p a t e nt e d I t can r e a d ily b e d em o n
.

s t r a t e d th a t this p r o du c t is s u p e ri o r t o sim il a r p r o d u cts

a lr e a d y o n th e m a rk e t . I t will giv e b e tt er p r o t ecti o n

 PRI C E P OLI C I E S 333

an d b ett er s ervi ce t o th e a u t om obil e o wn ers wh o inst a ll

it I t will yi e l d a s u bst anti a l e co n om y in ex p ens e t o
.

a u t o m o bil e o wn ers .

I t is esti m a t e d th a t th e a rti cl e c an b e m a nu fa ct u r ed
a t a co st o f fo r m a t eri a ls l ab o r a n d o th er m a n u
, ,

fa ctu r in g e x p ens e s .I t is t o b e s o l d to o wn e rs o f ca rs .

I t m u st b e att a ch ed by a m ech ani c b u t it ca n b e p u t ,

o n a ca r in l e ss th a n a n h o u r T h e cost o f a tt a ch in g
.

p r o b a bly will n o t b e m o r e th an T h e a cce ss o ry

is o n e th a t is es p eci a lly s u it ed t o s m a ll cars a lth o u gh ,

it m ay b e a pp li ed t o l a rger ca rs Th er e a r e s ev e r a l
.

o th e r a rti cl e s in t h e fi e l d th a t p e rf o rm S i m il a r s e rvi ces .

Th e s e c o m p e titiv e a rt i cl e s s ell a t p ri ce s ra n gin g fr o m

$ 22 t o $ 30 e a ch Fo r s u ch a cce ss o ri e s t h e r e t a il e r s
’
.

gr o ss p r o fit o r d in arily is a b o u t 30% o f his s e llin g p ri ce ,

a n d th e j o bb er s gr o ss p r o fit is ab ou t 2 5% o f his
’

s ellin g p ri ce .

Sh o u l d t h e C a ir o A ccess o ry C o m p any u n dert ak e

t o s e ll its p r o d u ct thr ou gh t h e r e gu l a r wh o l e s a l e a n d
r e t a il ch a nn e ls ? I f so for wh a t p ri ce sh o u l d t h e com
,

p a ny s e ll t o wh o l e s a l e rs ? Wh a t S h o u l d b e th e r e t a il
p ri ce o f th e a rti cl e ?
Sh ou l d th e co m p a ny a cc ep t o r d e rs d ir ect fr om
co ns u m e rs ? I f s o a wh t p ri
t a ce ?
,

203 . LAK E G AR M E N T C O MP N Y
A —
C AS H D I S C O U N T S
T h e Lak e G a r m e nt C o m p a ny o f N e w Y o rk , whi ch
has a r e pu t a ti o n fo r goo d q u a lity a n d styl e , fin d s th a t
m a ny o f th e d e p a rt m e nt st o r es t o whi ch it s e lls insist
u p o n a 5 % t o 1 0 % ca sh d is co u n t This insist e n ce is
l .

p r o m p t e d in p a rt by t h e p r a cti c e o f th e s e st o r e s in

l
Thr ee kin ds o f di s cou n ts ar e i n c o m m o n us e — c as h di s cou n ts ,
tr a de di s cou n ts , a n d q u a n t it y dis cou n ts A cas h di sc ou n t is a di s c ou n t
.

gi v en t o c ust o m ers for t he pr o m pt pa ym e n t o f b i lls I n t he w h o les al e

.

gr o cer y t r ad e, for e xam ple , the c ust o m a ry t er ms ar e 2 % 1 0 d ays ,

—
3 34 MARK E TIN G PR OBL E M S
cha rgin g m e r ch a n d is e to each d epartm e nt a t billed
co st a n d r e ly in g u p o n th e ca sh d is co u nts f o r p r o t e cti o n

a ga in st u nfo r e s ee n l o ss e s or e rro rs by d e p a rt m e nt

m a n a gers in p ri cin g m e r ch a n d is e .

Wh at p o li cy sh ou l d this m a nu fa c t ur e r a do p t in
qu o t in g p ri ces to th e b u ye rs fro m th ese st o re s ?

204 T AN A G E R BR E AK FA S T FO O D C O M P AN Y
.
—
QUAN T I T Y
D I SC O UN T S
T he T ana ger Bre a kfa st Fo o d C o m pa ny s e lls its
ro d u ct d ir ect ly t o re t a il g r o ce rs T h e go o d s th a t it
p .

m an u fa ct u re s ar e na ti o n a lly a d ve rtise d T h e co m .

p a ny g r a nts n o q u a ntity d is co u nts T h e m e r ch a.n d is e

is pack e d t w e nty fou r p a c ka ge s t o a ca se

- T h e cas e .

is th e s m alle st u nit o f sa le Th e se ca s e s ar e s o l d to
.

ret a ilers at th e sa m e p ri ce p er ca s e w he th e r th e o rd e r
is fo r o n e ca s e o r fo r t w o hu n d red ca se s , an d th e
co m p a ny p a ys th e fr e i ght t o d estin a ti o n .

I s th e p rice p o li cy o f this com pa ny soun d ?

n et 30 d ays . T h us , if a cust o m er pays his bill wi t hi n t en d ays fr om

t h e d at e o f t h e i n v oice , h e r e ce iv e s a dis c ou n t o f 2 % fr o m t h e fa ce o f
t he i n v oice A tr ad e dis c ou n t i s a di s c ou n t f r o m a list pr ice A h ar d
m
. .

war e m a n u f a c t ur e r ,
fo r e x am e ,
m a yq uo t e a tr a d e dis c ou n t o f 50— 1 0— 5
,

whi ch m ean s a di s c ou n t o f 50 % off t h e list p r ice , less a s eco n d d is cou n t

of less a t hir d di s c ou n t o f 5 % fr o m t he a m ou n t t h a t r e m ai ns af t e r
d ed uct in g t h e pr evi ou s d is cou n ts . T his disc ou n t h as n o t hi n g t o d o
wi t h t he t im e o f paym e n t or wit h t h e q u an t it y s o ld A q u a n tit y
.

di s c ou n t is a dis c ou n t gr an t e d t o a c ust om er i n p r o p ort io n t o t h e s iz e

o f his o r d e r— t h e lar ge r th e o r d er , t h e gr e at er t h e di s c oun t T his h as
.

no r efe r e n ce t o t h e t im e o f aym e n t A cas h dis c ou n t o r di n ar ily is

p
.

gr a n t e d o n i n v oi ces f or m er e an di s e o n whi ch a tr ad e dis c o un t or a

q uan ti t y dis cou n t h as b ee n giv e n .
 PRI C E P O LI C I E S 3 35

205 . A V O N SH O E M A N U FA C TU R I N G C O M P AN Y — P O S T
D AT I N G S
T he Avo n Sh oe M a nu fa ct u r in g C o m p a ny s e n d s
o u t its s a l e s m e n twi ce a y ea r t o s o li cit o r d e rs fro m
r e t a il e rs T h e co m pa ny m a n u fa ct u re s a st a p le l in e o f
.

’
m e n s sh oe s th a t s e ll a t r e t a il p ri ce s o f $ 8 t o $ 1 0 p er
p a ir . Fo r th e fa ll s e a s o n t h e sa l es m e n st a rt o n t h e
,

ro a d in A p ril Fo r t h e s p rin g se a so n th e sa l es m e n
.
,

ta k e o u t th eir s a m p l e s in O ct ob e r .

D u rin g th e e a rly p a rt o f th e s ea s o n th e sa le s m e n
a ccep t o r d e rs with p o st d a tin gs Th u s a re t ail e r m a y
‘-
.
,

o rd e r 300 p a irs o f sh o e s fro m a s a l e s m a n in M a y T he .

o rd e r is tra ns m itt e d t o t h e h o m e o ffi ce a n d t h e go o d s

a r e m a n u fa ct u r e d a n d S hi p p e d t o t h e r e t a il e r r e a chin g ,

his st o re p e rh ap s in J u ly T h e invo i ce fo r th e sh o e s
.
,

h o w e v e r is d a te d A u gu st 1 I f th e re t a ile r pays t he
,
.

bill n o t l a t er th a n A u gu st 1 0 h e r e ce iv e s th e r e gu l a r
,

ca sh d is cou nt T h e bill m a t u re s A u gu st 3 0
. T his .

p ra cti ce o f givin g p o st da tin gs is co m m o n in th e S h o e

-

tra d e a n d in s e v e r a l o th e r tra des .

Wh y sh ou l d th e A v o n Sh o e M a n u fa ctu r in g C o m
n f ll w h
t e p li y f r ntin st d a tin s ? -
p y
a o o o c o g a g p o g

206 . D AR T E R C O MPAN Y —
T R A DE D I S C O U N T S
Da rt e r C o m p any m a n u fa ct u r e a ll kin d s o f tir e
b o lts a n d si m ila r p ro d u cts I n q u o tin g p ri ce s a tra d e
.

d is co u nt syst em is u se d A st an d a r d p ri ce list is
.

issu e d to r e ta il ers a n d wh o l es a l ers T h e sa l es m e n .

ur e au o f Business Re sear ch Har var d Univ e rs it y

B , , u
B lle ti n N 1 0,o .

M a na g ment P ro blems i n R eta i l S hoe S to r s pp 1 7 1 8

e e , .
-
. U S D e par t
. .

m e n t o f C o m m e r ce M i sce lla e o us S eri es N o 3 4 T he M en s Fa cto ry

’
,
n .
,

M ade Clothi g I n d us try p p 24 2 24 4

n ,
.
- .
3 36 MARK E TIN G PR OB L E M S
q u o t e p ri ces to wh o l e sa lers a t the list p ri ce les s th e
tra d e d iscou nt s u ch a s
,
a n d 5 % o ff E a ch
.

wh o les a ler in t u rn qu o t e s his p ri ces t o re t a ile rs a t th e

list p ri ce s l ess th e tra d e d is cou nts th a t h e d ec i des to
b e s u ffi ci e nt t o p ro vi d e f or his n o rm a l ra t e o f gr o ss
p r o fit .T h e r e t a il e r a d d s his n o r m a l m a rk u —
p t o t h e

n e t co st O f th e m e r ch a n d is e . H is re t a il s e l lin g p ri ce
th u s d o es n ot co rr e spo n d to th e li st p ri ce T h e list .

p ri ce m e r e ly s e rv e s a s t h e b a sis fr o m whi ch t h e tr a d e

d is co u nts ar e d e du ct e d .

Wh a t a d va nt a ge s an d d is ad v a nt age s accru e t o
D a rt e r C o m p a ny a n d t o th e ir cu st o m e rs fro m th e
u s e o f this tr ad e d is co u nt syst em ?

207 . D E N N I SO N M A N U FA C T UR I N G C O M PA N Y —
T R ADE
D I S COUN T S
T h e fo ll o win g p ro bl em h as r e ce ntly co m e b e f o r e
th e D e nnis o n M a n u fa ct ur in g C o m p a ny fo r d e cis io n .

T h e p r o bl em is o n e o f r ea rra n gem ent o f th e d is cou nts

g r a nt e d t o cu st o m e rs .

T h e D enn iso n M a n u fa ct u rin g C o m p a ny is a w ell

e st a b lish e d b u sin e ss with its h e a d q u a rt e rs a n d p l a nt

lo cat ed in N ew E n gl a n d Br a n ch s a l e s o ffice s a r e
.

m ain t a in e d in a b ou t t hi rty o f t h e la r ge c iti e s o f this

co u ntry , C a n a d a , So u th A m eri ca , E n gl a n d , a n d D e n

m ark . I n a ddi ti o n re t a il st o r e s a r e m a int a in e d in fo u r

o f th e l a r ge r citi e s o f th e Unit e d St a t e s . Th e se re t a il
sto re s ar e e st ablis h ed p ri m arily fo r p r o m o ti o n al pu r
p o s e s a n d d o n o t co m p e t e to an y s u bst a nti a l d e gr ee
with th e r e t a il e rs carryin g th e co m p a ny s p ro du cts
’
.

T h e co m p a ny m an u fa ctu r e s a v a ri e d list o f p ap er
p r o d u cts , su ch as Shi pp in g t ags , m arkin g t ags , gu mm ed
lab e ls , cr ep e p ap er p ro du cts , j ew e llers cases , bo xes ,
’
 PRI C E P O LI C I E S 33 7

an d fin din gs Alth ou gh th e c om p any s e lls a la rge

.

q u a ntity o f s peci a l go o ds d ir ect to co ns u m ers , t his

p r o bl em is co n ce rn e d with th e ir r e gu l a r st o ck go o d s .

I n th e s e r egu la r st o ck go o d s th er e ar e a pp r o xim at e ly
it em s M o st o f th e s e it e m s a r e u s ed by th e
.

u lti m a t e co ns u m er in s m a ll q u a ntiti e s , a n d th e u nit

va lu e is s m all C o ns eq u ently th ey a r e d istrib u t ed

.

l a rge ly thr ou gh r e t ail ers .

Th e s e st o ck lin es a r e ca t a l o gu ed an d p ri ce d by th e
u ni t a n d in m a ny ca s es a ls o by t h e ca rt o n c o nt a inin g ,

six t en tw e lv e o r m o r e u nits T h e r e t a il p r i ce giv e n

, ,
.

in t h e co m p a ny s cat a l o gu e is qu it e gen era lly O bs e rv ed

by t h e r e t a il tra d e e x cep t in th e Fa r W e st wh er e hi gh
fre i ght r at es m ak e it n e cess ary t o ch ar ge a h i gh e r
r et a il p ri ce T h e int e nti o n o f th e c o m p any is th a t
.

t h e co ns u m e r wh o b u ys fr o m th e r e t a il m e r ch ant sh a ll
p ay t h e p ri ce whi ch is st a t e d in th e ca t a l o gu e . Wh en
t h e go o d s a r e b o x e d in ca rt o ns co nt a in in g m o r e th a n
o n e u n it t h e p ri ce st a t e d f o r t h e ca rt o n is ca ll e d t h e
,

list p ri ce an d th e co ns u m er p u r ch asin g a wh o l e cart o n

,

w ou l d b e giv e n this li st p ri ce by th e d eal er Wh e n .

go o d s ar e s o l d in l e ss th a n c a rt o n l o ts th e un it p ri ce
,

is sli ghtly hi gh er th a n th e p ri ce p er u nit in cart o n l o ts .

Fr o m th e r e t a il p ri ce o r fr o m th e ca rt o n o r list p ri ce ,

wh en th a t e xists th e d is cou nts to th e tr a d e a r e fi gu r e d

,
.

T h e wh o l e sa l e st a ti o n e r w h o can h a n d l e p r a cti ca lly

e v e ryt hin g th a t th e c o m p a ny m a k e s r ece iv e s a d is

co u nt o f 4 0% fro m th e list p ri ce p r o vi d e d h e s e lls n o t

le ss th a n $ 200 w o rth o f m er ch a n d is e in a cal e n d a r

yea r Un d e r cert a in co n d iti o ns h e m a y a ls o re ce iv e
.

in ad d iti o n ce rt a in q u a ntity d is cou nts . T h e m ini m u m

o f $ 200 is a n o m in a l a m o u nt a n d is e st a blish e d m e r e ly

as a gu a r a nt ee o f go o d f a ith o n t h e p a rt o f t h e wh o l e s a l e r .

A l a r ge p o rti o n o f th e co m p a ny s s a l es o f st o ck
’

g o o d s a r e m a d e d ir e c t t o r e t a il e rs thr o u g h t h e c om

p a n y s
’
tr a v e llin g s a l e s m e n A .s u bst a nti a l n u m b e r o f
th e se r e t a il e rs a lso ca rry o n a wh o l es a l e b u sin ess wh o l e ,

s a lin g to s m a lle r r e t a il e rs .

A r et a il e r wh o s e lls $ 500 w o rth o r m o r e O f th e c o m

r d ts y r r iv s d is u nt o f
’
p a n s o u c a ea e c e e a c o
y p
th e sa m e as th e wh o l es a l er T o th os e r e t a il ers s e lli n g
.
338 MARK E TIN G PR O BL E M S
l ess th a n $ 500 a yea r a d is co u nt o f 30% fr o m th e lis t
,

p ri ce is g iv e n Un d e.r c e rt a in c ir cu m st an ce s th e
re t a ile r j u st a s th e wh o lesa l e r m ay re ce ive qua ntity
, ,

d is co u nts r e ga r d le ss o f th e a nnu a l pu r ch a s es
, T wo .

third s o f th e s a l e s o f st o ck go o d s a r e m ad e t o r e t a il e rs
wh o re ce ive t h e 4 0 % d is co u nt Ou t o f d ea l e rs
.

w h o ca rry th e D e nnis o n goo d s s o m e thin g o v er ,

a r e in t h e 4 0% c l a ss a n d th e ir pu r ch a s e s a v e ra ge a b o u t
,

a y ea r .

’
T h e co m p a ny s s a l e s m e n ca ll on d ea l ers in t o wns o f
p p
o u l a ti o n a n d up Sm a ll p ur cha se s by d ea l e rs
.

in the se t o wns h o w e ve r ar e u su a lly m ad e fro m wh o le

, ,

s a le rs b e cau s e o f th e s a vin g in fre i ght All th e go o d s .

a r e shi p p e d fr o m th e com p a ny s fa ct o ry a n d th e b u ye r
’

p ays th e fre i ght .

N u m e r ou s o bj ecti o ns h a v e b ee n ra ise d to this dis

cou nt p l a n I n th e first p l a ce it h a s b ee n s u gge st e d
.
,

th a t th ere is a n e lem e nt o f u nfa ir n e ss in ha vin g t h e

a m ou nt o f th e d e a l e r s p r o fit d e p e n d o n th e q u a ntity
’

o f go o d s whi ch h e s e lls fo r th e co m p a ny N e v e rth e le ss .

,

th e r e qu ir em e nt o f $ 200 a ye a r fo r th e wh o l e sa le r a n d
$ 500 f o r th e re t a il e r is w e ll within th e re a ch o f th o s e
o f t h e tra d e w h o t a k e s u ffi c i e nt int er e st t o giv e t h e

lin e a d e qu a t e d isp l ay a n d p r o m o tiv e a tt e nti o n .

A ga in while it is th e co m p a ny s int e nti o n imm ed i

,
’

a t e ly t o a d v a n ce th e d is co u nt wh e n a wh o l e sa l e r o r

r et a ile r r e a ch e s th e m ini m um re qu ir em e nt it is o ft e n ,

d i ffi cu lt with a cc ou nts t o p u t th e in crea se d

d is co u nt in t o eff e ct as s oo n as th e m er cha nt is e ntitl ed

to it . I f th e co m pa ny fa ils to m a k e this ch a n ge at
o n ce ,
its o ve rsi ght is re se nt ed by th e m e r ch ant .

Th ere ar e a lso fr e qu e nt o c ca si o ns wh e r e a m er cha nt

r ea ch e s $ 500 in s a l e s o n e ye a r o nly to fa ll b e l o w th a t
a m o u nt t h e n e xt y e a r th er e by r e d u cin g his d is cou nt
,

in th e thir d ye ar A ft e r a d ea le r is o n ce p la ced in th e
.

$ 500 cl a ss h e re m a ins th ere u ntil fo r o n e c a l en da r y e ar

,

h e h as fa ll e n b e l o w th a t l im it R e du cti o ns in th e dis
.

co u nt h o we v e r a r e f a ir ly fre qu e nt o w in g t o th e flu e
, ,

tu a t io n s in a m er ch a nt s b u sin e ss an d a ls o b e cau se a
’

m e r ch a nt m a y go o v e r th e m inim u m in o n e y ea r d u e
t o an un u su a lly l a r ge o r d e r f o r D en ni s o n goo d s tha t
 PRI C E P OLI C I E S 339

h e m a y ha v e r e ceive d fr om o n e o f his cu st om e rs , a s ,
fo r e x a m p l e , fr o m s o m e go v e rnm e nt a ge n cy o r fr o m
a ra i lr o ad co m p a ny .

O n e o bj e ct o f th e hi gh d is co u nt is to re wa r d t h e
m ercha nt w h o t a k e s a n in t e r e st in this lin e , a n d it is
na t u ra lly d e sir a bl e fr o m o n e st a n d p o int t o h o l d fo rt h
th e in du cem e nt o f th e hi gh d is co u nt a s a n in ce ntiv e
to th e m e r ch a nt w h o h as n o t ye t a tt a in e d it . I t h as
b een f o u n d , h o w e v e r , th a t this stim u l u s is r a th e r d a n
ger o ns a s it m ay e n co u r a ge a m e r ch a nt j u st u n d e r t h e
lin e t o p a d his o rd e rs n ea r th e e n d o f th e y ea r in o r d e r
to go o v e r th e $ 500 m a rk . H a vin g p a d d e d his o rd e rs
in o n e yea r h e in e vit ably ru ns th e risk o f re q u irin g l e s s
go o d s th e n e xt y ea r a n d th u s m a y f a ll b e l o w th e
m i ni m u m a m o u nt .

Fri cti o n is a lso e n cou nt er e d with th e m er ch a nt wh o

m ay h a v e fa il e d t o r each th e m ini m u m by o nly a few
d o lla rs an d w h o cl a im s tha t a n i nj u sti ce is b e in g d o n e
t o h im wh e n h e w as SO n ea r t h e m a rk . This d iffi cu lty
h as b ee n p arti cu l a rly p r o n o u n ce d d u rin g th e p e ri o d o f
u n u su a lly h e a vy d em a n d a n d th e S h o rt a ge o f m a ny

it em s Un d e r th e s e co n d iti o ns th e co m p a ny h as fr e
.

q u e ntly b een u n a bl e t o shi p to a m er ch a nt a ll th e

go od s h e o r d e r e d . C o ns e q u e ntly t h e m er ch a nt h as
c l a im ed th a t if t h e co m p a ny h a d m a d e S hi p m e nts t o

him in a cco r d a n ce with his o r d e rs , h e w ou l d h a v e b e e n

w e ll o ve r th e $ 500 lin e .

T h e co m p a ny is e m b a rr a ss e d a ls o wh e n it co m e s t o
o p e n in g a n a cc ou nt with a n ew c u st o m e r . He m a y b e
in p r o s p ect a p ro m isin g 4 0 % a cco u nt ; p erh a p s h e
a lr e a d y h a s a l a r ge e st a blish e d b u sin e ss ; o r h e m a y

j u st b e st artin g a b u sin e ss o f his o w n o n a n u n u s u a lly

l ar ge s ca l e b e ca u s e o f e x p e ri en ce th a t h e h a s h a d in
s o m e l ar ge st o r e.

Su ch a m er ch a nt b eli e v e s th a t h e is e ntitl e d t o th e
4 0% d is co u nt b e cau s e o f th e f u t u r e p o ssibiliti e s o f his
b u sine ss I n m a ny O f th es e ca s e s th e c o m p a ny w o u l d
.

p r e f e r t o giv e t h e m a n a s gr e a t a n in d u ce m e nt a s
p o ssibl e t o p u t in a f u ll lin e o f go o d s if it co u l d b e d o n e

with o u t br ea kin g d o wn t h e e st a blish e d c u st o m .

I n th e l ast few y ea rs th ere h a s b e e n a r ap i d a d va n ce

34 0 M ARK E TIN G PR O BL E M S
in ri e s a n d $ 500 w o rth o f m e r c h a n d is e r ep r es e nts
p c

m u ch l e ss in b u lk th a n it d id in 1 9 1 4 C o ns e q u e ntly
.
,

by virt u e o f th e s e hi gh p ri ce s m a ny d ea l e rs ar e co m in g
,

int o th e 4 0 % c la ss I f p ri ce s a n d th e v o lu m e o f s a l es
.

go b a c k t o a m o r e n o r m a l l e v e l s o m e o f th e s e m er cha nts
,

will a ga in d ro p int o th e l o w e r c l a ss .

T h e co m p a ny is a ls o tr ou bl ed fro m ti m e t o ti m e
with th e p o o lin g o f o r d ers wh ereby tw o o r m o r e s m all
d ea l ers e ntitl e d o nly t o 30% d is co u nt c o m b in e i n
o r d e rin g th e ir go o d s in o r d e r t o ge t o v e r t h e $ 500 m a rk .

T h e co m p a ny ca nn o t st o p this a b u s e p ro vi d e d th e
co m bin a ti o n o f d ea l e rs h as th e go o d s shi pp e d a n d

bille d to o n e a dd r e ss T h e co m p a ny d o e s d eclin e t o
.

gr a nt th e d is co u nt if s u ch d ea l e rs as k to h av e th e
go o d s shi pp e d o r bill e d t o m o r e th a n o n e p l ace .

O n e o f t h e s u gge sti o ns th a t h a s b ee n m ad e for th e

s o l u ti o n o f this p r o bl em is to giv e th e e ntir e tra d e b o th,

wh o l e sa le rs a n d r e t a ile rs th e d is co u nt o f
,
This
w ou l d b e o bj e ct e d t o by th e wh o l es a le r as cu ttin g o ff
his tr a d e with th e s m a lle r r et a il e rs T h e wh o l e s a l er
.

n o w s e lls t o th e s m a ll e r st o r e s in u rb a n d istri cts a n d

e s p ec i a lly t o th e st o r e s in t h e ru r a l d istri cts a n d

s m a ll t o wns .

An o th e r s u ggesti o n h a s b ee n t o e li m in a t e th e m ini
m u m s a l e s r e qu ir e m e nt t o giv e to re t a il e rs 4 0% O ff
,

a n d a n e xtr a 1 0 % d is co u nt t o wh o l e s a l e rs . On e o f
th e d r a wb acks t o this p l a n is th a t n u m e r ou s r e t a il e rs
ar e a lso wh o l e sa l e rs . Th e y w ou l d i mm ed i at e ly c l aim
th e e xtra d is co u nt a n d it w o u l d n o t b e l o n g b e f o r e
,

o th e r l a r ge r e t a il e rs w ou l d b e d em a n d in g th e s a m e

d iscou nt a s th e ir co m p e tit o rs T h e co m p a ny a lso fear s

.

th a t th e intr o d u cti o n o f th e e xtra 1 0% d is cou nt t o

wh o l es alers wh o are a ls o r et a il ers w ou l d re su lt in p ri ce
cu tt in g.

Sh o u l d th e D e nnis o n M a nu fa ct u rin g C o m pa ny
r e vis e this d is coun t p lan ? I f s o , h ow ?
 PRI C E P O LI C I E S 34 1

208 . W I N DE R M E R E D R Y G O O D S C O M P AN Y —
V AR Y I N G
PR I CE S
T h e Win d er m er e D r y G o o d s C o m pa ny co n d u ct s a
wh o le sa l e d ry go o d s b u sin ess I ts a nn u a l sa l e s a re
.

a pp r o xi m a t e ly T he t e rrit o ry o f th is c o m
p a ny is d ivi d e d int o thr e e cl a ss es , c ity , s u b u rb a n , a n d
cou ntry T h e c ity tr a d e is th a t p rim a rily within a
.

few m il e s o f th e w a re h o u se T h e s u b u rb a n tr a d e
.

in clu d e s th e t e rrit o ry o u tsi d e th e city d istri ct b u t

within 2 5 o r 3 0 m il e s o f th e w a reh o u s e , a n d t h e co u ntry
trad e is t h e m o re r e m o t e di stri ct .

E a ch s a l e s m a n in th e c ity d istri ct h as a d r a wi n g
a cco u nt , whi ch is c r e d it e d with 2 5 % o f th e gr o ss p r o fit

o n his s a l e s T h e d r a win g a c co u nt o f e a ch s a l e s m a n
.

in th e s u b u rb a n d istri ct is cr e d it e d with 3 0% o f th e
gr o ss p r o fit o n his s a l e s T h e d r a win g a c co u nt o f
.

ea ch s a l e s m a n in th e c ou ntry tr a d e is cr e d it e d with

4 0% o f t h e gr o ss p r o fit o n his s a l e s T h e d r a win g
.

a c co u nts o f th e s e s a l e s m e n c o v e r b o th s a l a ri e s a n d

tra v e lin g e x pe ns e s .

T h e gr o ss p r o fit o n s a l e s is fi gu r e d o n t h e c o st o f
th e go o d s d e liv e r e d a t th e w a r eh ou s e a t cu rr e nt m a rk e t
p ri ces Sa l e s m e n ar e n o t giv e n th e b e n e fit o f a n in
.

cre a s e in t h e v a l u e o f m e r ch a n d is e o n h a n d n o r is ,

th e ir gr o ss p ro fit cu t d o wn by a d e cli n e in t h e m a rk e t
va lu e o f goo d s th a t th e y s e ll All o wa n ce s t o cu st o m e rs
.

a n d c a sh d is co u nts t a k e n by cu st o m e rs a r e d e d u ct e d

fro m t h e s a l e s b e fo re gr o ss p r o fit is d e t e rmi n e d A t .

th e e n d o f ea ch yea r t h e r a ti o o f l o ss e s fr o m b a d d e bts
t o s a l e s is w o rk e d o u t a n d this p e r ce nt a ge is d e d u ct e d
fro m th e s a l e s O f e a ch s a le s m a n b e fo r e d et e rm in in g
th e gr o ss p r o fit o n whi ch th e c o mm issi o n is p a i d .

T h e sa l es m e n a r e giv e n p ri ce lim its o n e a ch a rti cl e ,

a m ini m u m a n d a m a x im u m p ri ce Within th e s e p ri ce
.

lim its th e s a l es m a n m a y u s e his o wn d is cr e ti o n in v a ry

in g th e p ri ce f or b a r ga inin g with cu st o m e rs Th es e.

va ri a ti o ns ar e m a d e irr e sp e ctiv e o f th e q u a ntity O f

m e r ch a n d is e s o l d o n e a ch o r d e r N u m e ro u s c o m p eti
.

t o rs b u t n o t a ll co m p etit o rs fo ll o w th e sa m e p l a n o f
, ,

u sin g p ri ce li m its .
34 2 MARK E TIN G PR O BL E M S
Sh ou l d t h e W in d e rm e r e D ry G oo d s C om pany con
tinn e t o a d h e re t o this p o li cy o f p e r m ittin g s al esm e n
t o v a ry p ri ce s o r sh o u l d it a d o p t a o n e p ri ce p o li cy fo r -

ea ch t e rrit o ry ?
1

209 . M O R N I N G SI D E N O V E LT Y C O M P AN Y —
P R I CE
P O LI C Y
T he M o rnin gsi d e N o v e lty C o m pa ny o f N ew Y o rk
C ity s e lls its p r o du cts whi ch in cl u de n o v e lti e s , S ilver
,

wa re a n d S i m ila r go o d s e x cl u siv e ly by m a il Up to
, ,
.

th e p re s e nt ti m e its p r o du cts h a v e b ee n list e d in th e

’
co m p a ny s ca t a l o gu e at e ven p ri ces fift y ce nts
—
,

s e ve nty fiv e ce nts o n e d o lla r an d s o o n

-
,
I n asm u ch
,
.

as c o sts o f m a t e ri a l a n d l a b o r h a v e b ee n s u bj e c t t o

fre qu e nt ch a n ge d ur in g th e l a st few years it o ft e n ,

ti m e s h as b ee n ne ce ss a ry to ch a n ge th e p ri ces in th e
ca t a l o gu e .

I n its n e xt re visio n O f ca t a lo gu e p ri ce s sh ou l d th e ,

M o rnin gsi d e N o v e lty C om p a ny m o d ify its p o li cy a n d

qu o t e a t l ea st s o m e o f its p ri ces in O dd fi gur e s su ch a s ,

sixty fou r ce nts an d e i ghty tw o ce nts ?

- -

1
For a t r egar din g simi lar pr act ices in t he wh olesal e
t
st a e m e n
G r o cer y tr ad e s ee B ur e a u o f B us i n ess R ese ar ch Har v ar d Um v er3 1t y
, , ,

B u lleti n N o 1 4 M ethods of P a yi n g S a les me n a n d O perati n g E x pen ses

.
,

i n the Wholes al e Gr o cer y B us i n es s i n 1 9 1 8 14—1 5

pp ,
. .
 PRI C E P O LI C I E S 34 3

21 0 BE R K SH I R E
. P I AN O C O M P AN Y— G RAD E S OF
P R O DU CT
T he B e rksh ir e P ia no C o m p any m a nu fa ct u r e s a n
e x ce p ti o n a lly hi gh gr a d e O f p i a n o s T h e v o l u m e o f its
.

s a l e s is s m all in co m p ari s o n with th e v o l u m e o f n u m e r

ou s o th e r m a n u f a ct u r e rs T h e co m p any co nfin e s its
.

ou t pu t t o a sin gl e gr a d e o f hi gh q u a lity Su gge sti o ns .

fre qu e ntly ha v e b ee n m a d e th a t a ch ea p e r ty pe o f
p i a n o a ls o sh ou l d b e m a nu fa ct u r e d by this co m p a ny i n
o r de r t o in crea s e t h e v o l u m e o f sa l e s T h e fi n a n ci a l
.

res ou rce s o f th e co m p a ny a r e a de qu a t e a n d p l a nt ,

fa ciliti es cou l d r ea di ly b e in creas e d p r o vi d e d th e c o m

,

p any fe lt th at this ch a n ge in p o li cy w er e d es ir a bl e .

Up to th e p r es e nt tim e h o w e v e r th e co m pa ny h as
, ,

a d h e r ed st ea d f a stly t o this p o li cy O f p r o d u cin g b u t a

sin gle c la ss o f p ro d u ct .

I S this p o li cy s ou n d fr o m t h e sa l es st a n d po int ?

21 1 . BE A V E R HAT C O MP AN Y —
P R I C E P O LI C Y
T he B eave r Ha t C o m p a ny m a n u fa ct ur e r o f m en s
,
’

fe lt h a ts re t a i lin g at $ 7 d istrib u t e s its p r o d u ct t h r o u gh

,

m e n s fu rnishi n g st o r e s whi ch h a v e e x cl u siv e a ge n ci es

’
.

Th e s e a r e th e o nly fe lt h ats s o l d in th e se st o re s Pri o r .

to t h e la st y e a r a n y h a ts th a t cou l d n o t b e s o l d a t t h e
re gu lar p ri ce w ere r e t u rn e d by th e r et a il e rs t o th e
B ea v e r Hat C o m pa ny whi ch d is p o s ed o f th e m in j o b
,

l o ts at po ints r e m o t e fr o m t h e a ge n c i e s D ur in g t h e .

la st y ea r h o w e ve r th e B e av e r Ha t C o m pa ny h as pe r
, ,

m itte d t h e r e t a il a ge nts t o h a v e cl ea ra n ce s a l es o f th eir

su rp l u s st o cks o f h a ts a t th e e n d o f ea ch s eas o n A t .

th e se s a l e s th e $ 7 h a ts h a v e b ee n s o l d a t
T h e m a n u f a ct u re r n o w p r o p o s e s t o m a n u fact u r e
.

ha ts r egu la rly t o b e s o l d a t this l o w e r p ri ce Altho u gh .

34 4 MARK E TIN G PR OBL E M S
th es e h a ts will b e a t l east e qu a l in q u ality t o o th e r $ 6
bra n d s th e y m u st b e m a d e m o re c h ea p ly th a n t h e
,

$7 h a ts a n d will th ere fo re b e o f l o w e r gr ad e Th e y .

’
will b ea r th e m a nu fa ctu re r s bra n d b u t n o p ri ce m a rk .

T h e e x clu sive a ge n cy syst em is to b e m a int a ine d an d

th e $ 7 lin e is t o co ntin u e as th e m a in lin e o f h a ts s o l d
by th e se st o re s T h e su rp lu s st o cks o f $7 h a ts will b e
.

so l d at as d u rin g th e p a st y ea r b u t th e gr a d e

m a de to s e ll a t will b e u tiliz e d t o su pp l em e nt
“ ”
th o se st ocks in sp eci a l sa l es whi ch will b e h el d m o re
fre qu e ntly by th e r e t a ile rs .

Wh a t ar e th e ad va nt a ges an d d is ad v a nt ages o f this

n ew p o li cy fr om th e p o int o f Vi e w o f t h e r e t a il ers ?

Fro m th e p o int o f V i e w o f th e Be av e r Ha t C o m pa ny ?

212 . SHAM R O CK ST O R AG E BAT T E R Y C O M P AN Y —

PR I CE
P O LI C Y
Schoo l B u s ine s s A dm ini s trati on
of
H arvard Univers ity ,

C am bri d ge M ass ,
.

G entlem e n :
We are the distribu tors an d servi ce st ati on fo r the
Pre st O Lite St orage B att ery f o r thi s city an d t errit ory
- -

dire ctly tribu t ary there t o .

T he st ora ge b att e ry i s s t a n d a rd e qui pm ent for thi rty

three m ak e s of a u t om o b ile s twe n ty O f whi ch ar e re pres ent e d
,

in thi s c ity The se i n clu de f o r i n st an ce th e O ak lan d car

.
, , ,

o f whi ch there a r e m o re tha n fiv e hu n d re d in thi s co u nty

a l o n e t h e M a xwell ca r
, o f whi ch th er e a r e m o re th a n s i x
,

hu n dre d in t h e city th e C o le N ati o na l C halm e rs C han d ler

, , , , ,

a n d o the rs .

We are ab le t o pro cu re a li s t o f all au t o m obil e li ce nse s ,

t h e n am es a n d a d d re ss e s o f a ll o wner s m ak e o f car Thi s ,

.

m ake s dire ct c ir cu l ariz i n g ve ry co nve n i ent .

T h e problem with u s he re a s I h ave a l s o n o ti ced a t ,

o the r pl a ces is th a t w e s e l d o m s e ll d ire ct t o co n su m e r o r a t

, ,

co n sum e r s pri ces th ere b y n o t m aki n g t h e l a rge r pro fit f o r

’
,

o u rselves .
 PRI C E P O LI C I E S 34 5

There are m any d ealers h an dli n g a li n e o f c ar s a l s o ,

pro pri etors o f garages an d au t o m obil e r e p air sh o ps in eve ry ,

city wh o d o n o t carry a s t o ck o f st o ra ge b a tt e ri e s o n th eir

She lve s a n d wh o th er e f o r e h a ve n o m o n ey wh a t s o e v e r
inve st ed b u t wh o e x pe ct a n d ar e re ce ivi n g l arge d i s co u nt s
,

f r o m d i s tri b u t o r s a n d s e rvi c e s t a ti o n s li k e o u r s e lve s o n

, ,

n e w b a tt e ri e s a n d r e pair s .B u t a t thi s ti m e I wi s h o n ly t o
t ake u p t h e prob lem o f co n s um e r s b u s i n e s s o n n e w b att e ri e s
’
.

Fo r i n st an ce t h e co n s u m er s pri ce o n o ur b att e ry i s
’
,

t o d ea ler s a s m e n ti o n e d a b o ve t h e pri ce i s 25% O ff There .

f o re if t h e p ro d u ct s ell s a t $ 50 t he d eal e r s p rofit i s

’
, ,

I f t h e a ct u a l co s t t o u s i n cl u d i n g o n ly f re i ght a n d d rayage
, ,

is 50% O ff li s t pri ce o u r per cen t O f pro fit i s

, out O f
whi ch w e m u s t p ay all o verhea d pro t e ct t h e gu aran t e e a n d
, ,

give a cert a i n a m o un t o f f re e s ervi ce .

I al s o fin d that in m a n y i n s t a n ce s th e d eal e r as m en ,

t io n ed ab o ve wi ll s ell b att eri e s t o hi s f ri e n d s o r c u s t o m er s

, ,

t o a p pea s e s om e ill f eeli n g W ith thi s cu s t o m e r a t o u r p ri ce ,

t o hi m ( 25 % o ff ) in o th e r c a s e s h e s pli t s his d i s co u nt with

his cu st om ers .

It wo u l d p rob ably b e b ett er t o give th e consum er a

sli ghtly l o wer pri ce than t o d ivi d e t h e pro fit s e qu a lly with
ou r d e a l e r s w h o a r e u s i n g u s a s a c o n veni e n ce
,
.

Wou l d it b e t h e pro per thi n g t o cu t o u r d i s cou nts t o

d eale rs t o a m ini m u m re gu l at e d throu gh a n a ss o ci a ti o n
, ,

co n s i d e ri n g a t t h e s a m e t im e t h e f a ct th a t o u r b u yi n g p ri ce s

a r e l owe r th an s o m e o f o u r co m p etit o rs b u t s o m ewh a t hi gh e r

than the pri ce s o b t a ine d b y o ther co m petit o r s I n the .

l atte r c a s e s th e li s t p ri ce O f th e pro du ct is hi gher a n d th e

,

pro d u ct i s n ot s o s a ti s fact o ry .

C a n y o u o u tli n e a p rogra m f rom th e i n fo rm ati on I h a ve

,

given yo u th at will rem e dy t h e s it u ati o n ?

,

Yo u r s ve ry tru ly ,

( si gne d) T he Sham ro ck Sto rage B att ery C o m pany

34 6 MARK E TIN G PR O B L E M S
2 13 . H A R V A R D B U R E A U O F B U SI N E S S R E S E AR C H
P R I C E P O LI C Y
Yo rk Septem ber
N ew ,

H arva rd B u reau o f B u s i n e s s Re search ,

Ha rvard Un ive rs ity ,

C a m b ri dge M a s s ,
.

G e n tl em en :
N oti n g f rom t h e tra de pap ers that you h ave i s su e d a
very i n t eres ti n g a n d va l u a b l e b u lle ti n coveri n g yo u r m o re
re cen t inve s ti gati o n s i n t o th e co st o f ret ailing gro ceri e s ,

kn own a s B u lleti n N o 1 3 a s we u n d er st an d it we wou l d

.
, ,

a ppre ci at e ve ry m u ch r ece ivi n g a C op y th er eo f .

In f a ct w e wou ld li k e t o have o n e hu n dre d co pi e s fo r

,

d i stri bu ti o n with ou r s ale s o rganiz ati o n a n d will b e ve ry ,

p l e a s e d t o re m it y our u s u a l p ri ce f o r thi s m a t e ri al if y ou
c u s t o m a ril y s e ll it to m anuf a ctu rer s i n t e re st e d in f o o d
di stri b u ti o n p ro du ct s .

We a tt a ch a Co py o f o n e o f o u r rece n t cir cul ar s to re t a il

m erch an t s whi ch m ay b e o f int ere s t t o y ou a n d whi ch will
,

a t l eas t i n di ca t e t h e s t u d y w e a r e gi v i n g t o thi s qu e s ti o n o f

e c o n o m y in di s tri b u ti o n whi ch t o our m i n d c an b e m ore

,

g r e a tly p r o m o t e d t h rou gh a b e tt er o rgani za ti on o f co o pe r

a tive o r tra d e s e rvi ce tha n t h r o u gh t h e i n di vi d u a l o f t h e
avera ge co m m u nity u n d e rt aki n g t o p e rf o rm thi s S p eci a li z e d
a n d d a ily s e rvi ce with ou t t h e b e n e fit o f a d equ at e e qu i pm e n t
or d ecre a s e d c o s t thr o u gh t h e e l em e n t o f c o o pe ra ti o n .

We ar e ve ry m u ch int ere st e d ind ee d in th e rep ort s w e

have s e en of you r n e w B u lletin N o 1 3 a n d tru st w e m ay .
,

re ceive the o n e hu ndre d co pie s d e s ir e d or a t l ea st a co py f o r ,

o ur o w n u s e if it i s n o t p o ss i b l e f o r y o u t o f u r n i sh u s t h e
qu antity f or whi ch w e wi ll b e ple a s e d t o r em it u po n r e cei pt
,

o f inv o i ce t o co ve r .

Y ou r s ve ry tru ly ,

WYAN D OTT E C O MPAN Y

( Sign e d ) J K H e a the rw o o d . .
,

M a n a ger .

(This c o m p a ny m an u fa ct u r e s a w e ll kn o wn f o o d -

p r o d u ct th a t is n a ti o n a lly a d v e rtis e d ) .

C am b ri dge , M a ss ,
Se pt em b e r 22, 1 9 1 9 .

Mr J K H e atherwo o d M an ager
. . .
, ,

Wya nd ott e C om pa n y ,

N ew Y o rk C ity .

D ea r Sir :
Yo u r l ett er O f Sept em b er 1 5th h a s been re ce ived .

We ar e t o day s e n ding yo u b y A m eri can E x pre ss charges ,

 PRI C E P O LI C I E S 34 7

co llect o n e hun dred co pie s o f o u r n e w gro ce ry bu ll e ti n

,
.

O ur b i ll f or $ 1 00 i s e n cl o s e d .

We a r e a l w ays gl a d to s u p ply m a n uf a ct ur e r s with co pi e s

o f o ur b u ll e ti n s f or th e ir s a l e s m e n b u t w e h a ve f o u n d it b e s t
t o li m it t h e b u l k s hi p m e n t s t o thi s p u rp o s e D i s tri b u ti o n .

t o t h e re t a il trad e t h r o u gh a n y O ffice o the r th an o u r o w n

m a k e s it m o re di fificu lt f o r u s t o ge t in t ou ch W ith t h e gro ce r s
w h o can C o o p era t e a n d c o n se q u e n tly r e t ar d s t h e e x t e n s i o n
o f ou r re s e a r ch wo rk .

We gre atly a ppreci a t e yo u r i n tere s t a n d w e Sha ll b e ,

gl a d t o h e ar f ro m y o u a t a n y t i m e if there i s a n y f u rth e r
,

i n fo rm ati o n tha t w e ca n give y o u .

Yo u r s very tru ly ,

( s ign e d ) BUR E AU O F BUS IN E SS R E SE AR C H

N e w Y o rk ,

O ct o b e r 1 1 9 1 9 ,
.

B ur eau o f B u si n e ss Re s e arch ,

Ha rv a rd Un ive rs i ty ,

C am b ri dge M a ss ,
.

D e ar Sir s :
You r s of the 22n d re ce ive d a l so yo u r in voi ce o f th e
,

sa m e d at e f o r $ 1 00 co ve ri n g 1 00 c o pi e s O f yo u r B u lle ti n
,

N O 1 3 s hi p pe d in a cco rd a n ce with o u r r e q u e s t O f Se pt e m b e r
.
,

1 5th a n d w e h ave a l s o j u s t r e ce iv e d t h e b u ll e ti n s
,
.

H oweve r a s thi s b u ll e ti n a ppe ar s t o b e a s m all pa m phle t

, ,

th e pu b li ca ti o n o f wh i ch in a n y r e a s o n a b l e q u a n tity wo u l d
pr ob a b ly n o t co s t in e x ce ss o f 5 c e ach a n d a s it h as b e e n ,

o ur u n d er s t a n d i n g th a t i n s tit u ti o n s O f t h e ch ar act e r o f
H a rva r d co n d u cti n g re s ear ch wo rk al o n g th e s e li n e s f o r
,

t h e ge n era l e d u ca ti o n al go o d a n d with o u t p r o fit b e i n g t h e
,

prim a ry i d ea h ave b e en a ccu s t o m e d t o m a k e a n o m i n a l

,

ch arge t o c o ve r t h e co s t o f p ri n ti n g h a n d li n g a n d Shi p pi n g
, ,

su ch i n f o rm at i o n a s i s t h e re s u lt o f the ir re s e ar ch wo r k w e ,

a r e wo n d e ri n g W h e th e r th e r e i s n o t a n e rro r in thi s ch a rge

of e a c h f o r 1 00 o f th e s e s m a ll p a m phl e t s t o b e u s e d
f o r e du cati o n al p u r po s e s a s w e co n t e m pl a t e a n d b e fo re ,

r e m ittin g w e wo u l d a pp r e ci a t e y o u r a d vi c e o n thi s p o i n t .

Y ou r s ve ry t r u ly ,

WYAN D OTTE C O M PANY ,

( Sign e d ) J K H e a the rwo o d . .

,

M a n a ger .

Wh a t answ e r t o this l e tt e r sh o u l d h a v e b ee n m ad e
by th e B u r e au o f B u sin e ss R e s e ar ch ?

T h e f oll o wi n g s t at e m e n t i s q u o te d f ro m a c ircu lar i ss u e d

b y t he B u r e a u o f B u s i n e ss R e s e a r c h :
u o
T he Bur e a w as e s t a bh s h ed i n 1 9 1 1 t ga t he r r e li a b le , u p— t o d at e
—

o o
in f rm a t i n r e gar d i n g e v e r y-d a y b u s m cs s m e t h ds a n d o p ro b le ms .
34 8 MARK E TIN G PR OBL E M S
While o
this inf r m at i n is s o ou
gh t prim arily for t e achi n g pur pos es i n
oo
t he G r ad u at e Sch l o f Bus in es s Adm i nistr at i n , H arv ar d Um v ers ity, o
o o
in pr act ice it h as pr v e d t h a ve a di r ec t c m m e r cial v al e o u .

T he r es ults o f t his r ese ar ch ar e f ur ni she d wi t h t ch ar ge t m er ou o

ch a n ts wh o c oo o
pe r at e i n t he ir pr e p ar a t i n b y s e n din g i n r e p rts fr m o o
u
t heir b us in ess Be ca s e o f t he i n t er es t t h at h as b e e n sh w n , t h es e
. o
o
b ull e t ins h ave al s be e n m ade a v ailab le at t he st at e d ri ces t t he r o o
b us in es s m e n. o
T he r ece ip ts f r m t he s ale o f t h ese b let in s , it m a y
o o o o o
be ad d ed , ar e us e d s le ly t c v e r a p rt i n o f th e e xpens e o f c lle ct in g o
a n d s um m ar iz in g t he d at a t h a t are p blis h ed u .

214 . SQUAN TUM PA P E R C OMPAN Y —

E XP O R T O R DE R S
T h e Squ antu m P ap e r C o m p a ny p r o d u ce s pa p e r
th at is u se d i n th e j ob p rintin g in d u stry T h e b u lk o f
-
.

th e com p a ny s o u t p u t is s o l d i n t h e d o m e sti c m ark e t ,

’

bu t it a ls o h as s o m e e x p o rt tr a d e
‘

E a rly in 1 9 20, th e Squ a nt u m P ap er C o m p a ny

r e ce iv e d a n o rd er fr om A u stra li a This o r d e r , whi ch .

w a s n o t l ar ge , wa s th e first o n e th a t h ad b e e n r e ceiv e d
fro m this A u stra li a n fir m T h e pa p er o n this o r d er.

was t o b e d e li v e r e d u n d er th e m a n u fa ct ur e r s tr a d e
’

m a rk .

T h e Squ a nt u m P a p e r C o m p a ny a cc ep t ed th e o r d e r
an d i mm e d ia t e ly th e A u str a li an fir m d ou bl e d th e
o r d e r a t th e s a m e p ri ce .

For d o m esti c tr a d e th e Sq u a nt u m P ap er C o m p a ny
ha s a p o li cy th a t it will a cce p t o r d e rs a t q u o t e d p ri ce s
o nly f o r d e liv e ri e s fr o m st o ck o r f o r d e liv e ri e s within

a p e ri o d n o t e x ce e d in g t w o m o nths Fo r d e liv e ri e s .

l at e r th an tw o m o nths , o r d ers ar e a cce p t e d o nly o n

c o n d iti o n th a t t h e p ri ce Sh a ll b e d et e r m in e d by th e

m a nu fa ct u r e r at tim e o f d e liv e ry Thi s p o li cy h a d .

n o t b ee n e x p l ain e d t o t h e A u str ali a n fir m a t t h e tim e

th e o ri gin a l o r d er wa s a c cep t e d .

T h e A u stra li a n fir m ins ist e d th a t th e a cce p t a n ce

o f th e in iti a l o r d e r a m o u nt e d t o gi v in g it th e r ep r e s en
 PRI C E P O LI C I E S 34 9

ta t io n fo r th e H e n ce it a ss ert ed t ha t th e Squ an
lin e .

t u m P a p er C o m p a ny h ad a t l ea st a m o ra l o b li ga t i o n
t o p r o vi d e a n a d e q u a t e s u p ly a n d to p e rm it t h e ini ti a l
o r d e r to b e d o u bl e d a t th e q u o t e d p ri ce .

Wh a t p o li cy Sh ou l d th e Squ ant um P ap er C om p any

h a v e a d o p t ed ?

2 15 . PE TE R S C O M P AN Y —
R E SA L E P R I C E
M AI N T E N A N C E
B y a s erie s o f d ec isi o ns o f th e Su p r e m e C o u rt o f
th e U ni t e d St a t e s th e ri ght t o m a int a in r e s a l e p ri ce s
,
‘
h as b ee n d en i e d t o m a n u f a ct u r ers I n 1 907 th e .
,

Su p r em e C ou rt in th e c a s e o f D o b b S M e rrill C o m p a ny -

ver s u s Str a u s d e ni e d t h e ri ght o f t h e p u blish e r t o m a in

t a in th e r es a l e p ri ce o f a co p yr i ght e d b o o k I n 1 9 1 1 .
,

in th e cas e o f Dr M il e s M e d i ca l C o m pa ny ver s us P ark

.

So ns C o m pa ny t h e C o u rt h e l d th a t a n a tt e m p t t o
,

fix r es a l e p ri ce s o n a rti cl e s o f ge n er a l u se e x cep t th o s e ,

p r o d u ce d u n d e r p a t e nts o r o th e r st a t u t o ry gr a nts w a s ,

a ga inst p u bli c p o li cy a n d v o i d I n 1 9 1 3 in t h e c as e .
,

O f B a u e r C h e m i ca l C o m p a ny ver s u s J a m e s O D o n n e ll
’
,

th e C o u rt d e ni e d th e ri ght O f a m a n u fa ct u r e r o f a
pa t e nt e d a rti cl e t o li m it t h e p ri ce by n o ti ce a t whi ch
fu t u r e r e t a il s a l e s o f th e a rti cl e w er e t o b e m a d e This .

w a s th e S O ca ll e d Sa n o to ge n ca s e
-
T h e C o u rt r u l e d .

th a t th e o wn e rshi p o f a gr a nt o r p a t e nt d id n o t giv e
t o t h e pa t e nt ee th e ri ght t o i m p o s e u p o n t h e pu r ch a s e r
‘
R e fe r e ces o n r es ale pr ce m i t e a c e : P T C h e r i n gt o n
n i a n n n . .
,

Advert s i g a s a B us i ne s Fo
i n C h am b e r O f C o m m e r ce o f t he Un it e d
s r cc .

St a t es R eport of the S p i a l Com m tt e o M i te nce f R e le P ri s

,
ec i e n a n na o sa ce ,

19 16. Bo st o n C h am b e r o f C o m m e r c e R f r e d u m o M i tena nce

, e e n n . a n

of R e a le P ri ces
s M y 8 19 16
,
a F W T a uss ig P r ice M ai t e a n e
, . . .
,
n n c

A me ri ca n E co om i c R n w S u p p l m en t M r c h 19 1 6
e vi e ,
E S R o ge rs
e , a ,
. . .
,

P r e d a t o r y P r ice C u tt i g Un fair T r a d e H r rd La w R vi ew
n as , a va e

D e ce m b er , 1 9 1 3 P r i n te rs I
’
. nk .
3 50 MARK E TIN G PR O BL E M S
of his goo ds a n y o bli ga ti o n a ft e r s u ch p u r ch a s e h a d
,

b een m a d e t o s e ll s u ch go o d s o nly a t th e p ri c e n am e d
,

by th e pa t e nt ee T h e ess e n ce o f this d e cisi o n t ak e n

.
,

t o ge th er with s e v e ra l S u p p l em ent ary d e c isi o ns d u rin g

th e n e xt t w o ye ars w a s th a t if a m a nu f a ct u r e r h as
,

p a rt e d with t h e titl e t o his p r o d u ct h e c a nn o t co ntr o l

th e r e s a l e p ri ce wh e th e r th e a rti cl e b e p at e nt e d o r n o t
—
,
.

Se v e ra l bills h a v e b e e n intr o d u ce d int o C o n gr e ss

to gra nt m a n u fa ct u r e rs th e p rivil e ge u n d e r ce r t a in ,

co n d iti o ns o f m a int a inin g r e s a l e p ri ce s

,
O n e o f th e s e .

bills w a s th e s o ca ll e d St ep h e ns Ashu r st Bill intr o du ce d

- -
,

in 1 9 1 5 This bills was a s fo llo ws :

.

Be i t en acted by the S ena te a n d H ou se of R epr es en ta ti ves

of the Un i ted S ta tes of A m er i ca i n C on gr es s a s sem bled , Th a t
in a n y co n tract f or th e s ale O f a rti cl e s O f co m m erce t o a n y
d e al e r , wh o le s a le o r re t ail , by a n y gro we r , p r o d u cer , m an u
f a ct u re r , o r o wn e r there o f , u n d e r tra d e m ark o r s pe ci a l b r an d ,
-

“ ”
he re inaf te r referred t o a s t h e vend o r , it shall b e l awfu l
fo r s u ch ve n d o r , wh en eve r t h e co n tr a ct co n s titu t e s a tra n s
a cti on o i co m m e rce a m o n g t h e s e ve ra l St a t e s , o r with f o re i gn
na ti ons , or in an y Territo ry O f th e Un it e d St at e s , o r in th e
D i stri ct o f C o l um bi a , o r b e twee n a n y s u ch Te rrit o ry a n d
an o ther Territo ry or be twe en a n y s u ch Te rrit o ry o r Te rr i
,

t ori e s a n d a n y St at e s o r th e D i s tri ct o f C o lu m b i a o r with ,

a f o rei gn n ati o n o r n a ti o n s o r b e twe e n t h e D i s tri ct o f

,

C olum b i a an d a n y St a t e o r St at e s o r a f o re i gn na ti on o r
nati o n s to pre s crib e th e u n i fo rm pri ces a n d m ann er s o f
,

s ettlem en t a t whi ch t h e diff eren t qu aliti e s an d qu an titie s o f

e ach a rti cl e co ve re d b y su ch co n tra ct m ay b e re s o l d : P r o

vid ed ,
That th e f o llowi n g c on d iti o n s ar e co m plie d with :
( A ) Su ch vend o r s hall n ot have a n y m o n o p o ly o r co n
trol o f the m arket f or arti cl es bel o n gin g t o t h e s a m e genera l
cl a ss o f m e r ch a n d i s e a s s u ch a rti cl e o r a rti cl e s O f c o m m e r ce
a s Sh all b e co ve re d by s u ch co ntra ct o f s a l e ; n o r Sh a ll s u ch

ven d or b e a p arty t o a n y a greem en t c om b i n ati o n or u nder

, ,

s t andi n g with a n y co m petit o r in t h e p r o d u cti on m a n u fa c ,

tu re o r sale o f an y m erchan di se in th e s am e ge n eral cla ss in

,

regard t o th e pri ce a t whi ch t h e s am e shall b e s old e ither to

d e a l er s a t who l e sa l e o r re t a il o r th e p u b li c .

( B ) Su ch ve n d o r sha ll file a t th e O ffice o f t he Fe dera l

Tra d e C o m m i ss i o n a s t at em ent setti n g f o rth the tra de
m ark O r s pe ci a l bran d own e d o r cl a im e d by su ch ve n d o r in
re spe ct o f su ch a rti cle o r arti cl e s o f co m m e rce t o b e co vered
b y s u ch c o n tra ct o f s a l e a n d a l s o f r om ti m e t o tim e a s t h e
, ,

s am e m ay b e a d opt e d o r m o di fie d a Sche d u l e s ett in g f orth

,

th e u ni form pri ce o f s al e th ere of t o d ea l ers a t wh ole s ale a n d

 PRI C E P O LI C I E S 35 1

the u ni fo rm pri ce o f sal e the re o f t o d e alers a t ret ail fro m ,

wha t ever so u rce a cqu ired a n d th e u ni fo rm pri ce o f s ale

,

thereof t o the pu bli c ; an d u pon fili n g s u ch s t a te m ent s u ch

, ,

ven d or s hall pay t o t h e Fed era l Tra d e C o mm i ss i o n a regi s

tr a tion f ee o f $ 1 0 . Pri ce s s et f o rth in s u ch s che d u l e a n d
m ad e in a n y c ontra ct p u r s u a n t to t h e p ro vi s i o n s o f thi s
Act sh a ll b e u ni f orm t o a ll d e al e r s in li k e c ir cu m s t an ce s ,

d i ff erin g o n ly a s t o gra d e q u a lity o r q u antity o f s u ch

, ,

a rti cl e s so l d t h e p o i n t o f d e livery a n d t h e m a n n e r o f se ttl e

, ,

m ent a ll O f whi ch d i ff eren ce s sha ll b e s e t f o rt h in s u ch

,

s che d u l e ; an d there Shall b e n o di s crim i na ti o n in f avo r o f

a n y ve n de e by t h e a ll o wan ce o f a d i s co u n t r eb a t e o r co m , ,

m i ss i o n f or a n y cau s e o r by gra n t o f a n y s pe ci al con ce ss i on

or by a n y o ther d e vi ce wh a t s o e v e r .

( C ) Su ch co ntra ct s f o r t h e s al e o f s u ch a rti cle o r a rti cl e s

o f c o mm e r ce m a y p ro v i d e f o r d i s p o s a l s a l e s a t a ppr o pri a te
tim e s d u ring whi ch pe ri o d s d u ly s et f o rth in s u ch s ta t e
, ,

m e nt o r in su ch s ch ed u le o f pri ce s a s sh a ll b e fil ed b y su ch
ven d or su ch d e aler s m ay s ell s u ch arti cle o r a rti cle s o f co m
,

m er ce f or a pri ce o the r th an t h e u n i fo rm p ri ce a s s e t f o rth

in the s che d u le provid e d in t he pre ce ding paragra ph ( B ) ;
P rovid ed Tha t s u ch a rti cl e or a rti cl e s o f co m m er ce Sha ll
,

h ave fir st be en O ff ered t o t he ve n d or by s u ch d ealer by ,

writt en O ffer a t the pri ce pa i d f o r the s a m e by s u ch d eal e r

, ,

a n d th a t su ch v e n d o r n o t l e s s th a n t h ir ty d ays p ri o r t o t h e
d a te s et f o rt h f or t h e n e x t d i s p o s al s al e a f t er re a s o n a b le
,

O p po rt u nity t o inspe ct su ch a rti cl e o r a rti cl e s Sh all ha ve

,

refu sed o r neglect ed to a ccept s u ch o ffer .

( D ) An y a rti cle o f co mm erce or a n y cart on package , ,

o r o the r r ece p t a cl e in cl o s i n g a n a rti cl e o r arti cl e s o f c o m

m er ce co ve re d b y s u ch co ntra ct a n d in t h e po s se ss i o n o f a
d ea le r m ay b e s o l d f o r a p ri ce o the r tha n t h e u ni fo rm p ri ce
fo r r e sa l e b y s u ch d e a l er f o r s u ch q u a lity a n d q u a n tity a s
s e t f o rth in t h e s ch e d u l e p r o vi d e d i n t h e p re ce d i n g p a ra

r
g p a h B
( ) : F ir s t ,
if s u ch d ea le r s h a ll d e c i d e t o d i s co ntin u e

t he s al e o f s u ch a rti cle o r a rti cl e s o f c o m m e rce o r if s u ch ,

d eale r sh all ce a se t o d o b u si n e ss a n d t h e s a le i s m a d e in t h e
co u r s e o f wi n di n g u p t h e b u s i n e ss o f s u ch d ea l e r o r if s u ch ,

d ea l er sh all h ave b e co m e b a n k ru pt o r a re ce ive r o f t he b u s i

ne ss o f s u ch d e al er s ha ll have b ee n a ppo i n te d ; P r o vided ,

( )
a Th a t s u c h a r t i c l e o r a rt i cl e s O f co m m e r ce s h a ll h a ve fi r st
b ee n o ff e re d t o t h e v e n d o r the re of b y s u ch d eal er o r th e
lega l re pre s e n ta tive o f s u ch d e a le r b y written O ffe r a t t h e ,

p ri c e p a i d f o r t h e s a m e b y s u ch d ea l e r a n d th a t s u ch v e n d o r
,

a f te r re a s o n a b le O pp o rt u nity t o i n s p e ct s u ch a rti cl e o r
a rti cle s s h a ll h a ve re f u s e d o r n egl e ct e d t o a cce pt s u ch o ff e r :

P r ovided ( b ) Tha t s u ch d e a le r o r t he le ga l re pre s ent a tive

, ,

o f s u ch d e a l e r S h all file a t t h e O ffi ce o f t he Fe d e r a l Tr a d e
,

C o m m i ss i o n a s ta te m ent s etti n g fo rt h t h e rea s o n f o r s u ch

3 52 MARK E TIN G PR O BL E M S
s al e , refu sa l o r n e glect O f s u ch vend or t o a ccept s u ch
th e
o ff e r a n d t h e gr a d e
, q u ality an d q u antity o f s u ch a rti cl e
, ,

o r a rti cl e s O f co m m e r ce t o b e s o s o l d ; o r se con d if s u ch , ,

a r ti cl e o f co mm er ce o r co n t e n t s o f s u ch c a rt o n p a ck a ge o r , ,

o the r r e ce pt acl e sh a ll h a ve b e c o m e d a m a ge d d et eri o ra te d , ,

o r s o il e d : P r ovi d ed Tha t s u ch d am age d d et eri orate d or

, , ,

s o il ed a rti cl e shall ha ve fir s t b ee n o ffere d t o th e ve n dor by

s u ch d e al er by writt e n off er a t t h e pri ce pai d f o r th e s am e ,

by s u ch d eal er o r at th e o pti on o f s u ch ven d o r in e x cha n ge

, ,

f or s i m il ar a rti cl e s n ot d am age d d e t eri ora t e d o r s o il e d a n d , , ,

tha t s u ch ven d or aft er rea s o n ab le O ppo rt u n ity t o ins pe ct

s u ch a rti cl e o r a rti cl e s shall h ave re fu s e d or negl ect e d t o
a cce p t s u ch o ff e r a n d th a t s u ch d a m a ge d d e t eri o r at e d o r
, , ,

s o il e d arti cl e Shall there af t er o n ly b e o ffe re d f or s al e by s u ch

d e a l er with pr om inent n o ti ce t o t h e pu r cha s e r tha t s u ch
a rti c l e is d am age d d et eri o rat e d o r s o il e d a n d th at th e
, , ,

p ri ce ther eof i s re d u ced be ca u s e o f s u ch d a m age .

Sec 2 That t h e pro vi s i o n s o f t hi s A ct sha ll n o t a pply

. .

in ca s e s of s al es o f s u ch arti cl e o r a rti cl e s o f co m m er ce t o
t h e Un it e d St at e s or in case s of s a l e s o f s u ch a rti cl e s t o a n y
,

St a t e o r pu bli c lib rary o r t o an y s o ci ety o r i n stit u ti o n in co r

,

p o r a te d or e s t ab li she d s o l e ly f or re li gi ou s phil o s o phi cal , ,

e d u cati o n a l m e di cal s ci en tifi c phil a n thr o p i c o r lit erary

, , , ,

p u r p o s e s m a d e in go o d f a ith f o r u s e th er eo f b y su ch s o ci e ty
,

o r i n stit u ti o n .

In si m ilar bill was intr o du ce d by M r K elly

19 19, a . .

T h e K e lly bill r e q u ir e d th a t e v ery v e n d o r e l e ctin g t o

m a int a in r e s a l e p ri ce s in a cco r d a n ce wi th th e co n d i
ti o ns o f t h e bi ll m u st file with th e Fe d era l Tra d e C o m
m issi o n a st a t em e nt o f his br a n d o r tr a d e m a rk a n d a -

s ch ed u l e o f th e p ri ce s t o wh o l e s a l e rs r e t a il e rs an d th e , ,

p u bli c T h e bill r e qu ir e d th a t p ri ces sh o u l d b e u nifo r m

.

to e a ch c l ass O f d ea l e rs e x cep t fo r v a ri atio ns d u e t o ,

d i ff er e n ces in gr a d e q u a lity o r qu a ntity o f th e a rti c l e

,

s o l d th e p la ce o f d eliv e ry a n d th e t erm s o f s e ttlem e nt

, ,
.

All th e se va ri a ti o ns in p ri ce s m u st b e st a t e d in t h e
s ch e du l e file d with th e Fe d era l Tra de C omm i ssi o n .

P e t e rs C o m p a ny m a n u fa ct ur e t oo th p a st e a n d
si m il a r t o il e t a rti c l es Th e ir p r o d u cts ar e d istrib u t e d
.

thr ou gh wh o l e sa l ers T h e go o d s ar e m a d e to b e s o l d
.

a t s p e cifi e d r e t a il p ri ces b u t fr e qu e ntly t h e p ri ce s a r e

,

cu t . B efo r e th e w ar th e p ri ces w er e m a rk e d o n th e
s a d v e r tis e m en t s
’
m er ch an d is e an d s t at e d in th e co m p an y .

Wo u l d it b e to th e a d va nt age o f this co m p a ny to
 PRI C E P OLI C I E S 3 53

en cour a ge th e e na ct m e nt o f l e gisl a ti o n s u ch as w as
r s d in t h e S te h e ns Ash rst a d K e lly bills ?
p opo e p u n -

216 .M A S O N SH O E C O M PAN Y P R O P O S E D L E G I S LA T I O N
—

’
FO R M A R K E T I N G R E T A I L E R S C O S T P R I C E O N

M E R C H AN D I S E
66 t h C O N G R E SS
l s t Se ss i on
S . 29 04
IN THE SE N A T E O F T HE UN I T E D ST A T E S
A u gu s t 23 ( ca len d ar d ay A u gu s t 1 9 19
,
.

Mr J one s o f Wa shi n gt o n intro d u ce d t h e fo llowin g bill ;

.

whi ch was rea d twi ce a n d re ferre d t o t he C o m m itt ee

o n Int er s t a t e C o m m e r ce .

A BI LL
Relati n g t o m anu fa ct u re d a rti cle s i n t en de d fo r i n t ers t a te
co mm e r ce , a n d f o r o th e r p u rp o s e s .

Be i t ena cted i n the S ena te a nd Hou s e of R epr ese nta ti ves

of the Un i te d S ta te s of A m er i ca i n C on gr ess a s s em bled , Th a t
t h e m anu fa c tu re r o f a n y a r ti cl e p ro d u ce d a f t e r t he p as s a ge
o f thi s A c t , a n d int e n d e d t o b e p u t in i n t e r s tat e c o m m e r ce ,

sha ll p l ainly m a rk u po n o r a tt a ch t o s u ch arti cl e t h e co s t

thereo f .

Se c 2 Tha t e ve ry 1 e ta iler o f a n y m a n u fa c tu re d arti cl e

. .

ca rri e d in i n t e r s t a t e c o m m e r ce a ft e r t h e pa ss a ge o f thi s Ac t
shall pu t u p o n o r a tt a ch t o s u ch a rti cl e b e fo re s o l d to hi s
cus t o m e i s in pl ai n fi gu re s t h e co s t O f s u ch a rti cl e t o him .

Se c 3 Th a t t h e A t t o rn ey G e n e ral i s a u tho rize d a n d

. .

d ire cte d t o m a k e s u ch r u l e s a n d re gu l a ti o n s a s h e m ay d ee m
n ece ssa ry t o ca rry o u t t h e p ro vi s i o n s o f thi s Ac t .

Se e 4 Th a t a n y vi o l a ti o n o f an y o f th e pr o v i si o n s o f
. .

this Act sh all be a m i s de m ea n o r a n d sh all be pu n i she d by

3 54 MARK E TIN G PR OBLE M S
a fin e Of n ot m o re tha n o r by i m pr is o nm ent f o r n o t

m o re th an o n e y e a r o r b y b o th s u c h fin e an d i m pri s o n m ent
,

in t he d i s cr eti o n o f t he c o urt
.

Wh a t a ttit u d e sh ou l d th e p resi d ent o f th e M as o n

Sh o e C o m p a ny t ak e t o w a r d this bill ? T h e com p a ny
’
m a n u fa ct u r e s m en s sh o e s o f m e d i u m gr a d e . T he
sh o es ar e s o l d u n d e r th e m an u fa ct u rer s br an d d ir e ct
’

t o r e t a il ers in th e n a ti o n al m ark e t
.
 B I B LI O G R AP H Y
In this bibli o gr a phy s pe ci a l arti cl e s in pe ri od i cal s ,

gov er n m e n t b u lle ti n s a n d s i m il a r p am p hl et s a r e n o t li s te d ,
.

Re fe r e nce s a r e m a d e t o t h e m in c o n n e ct i o n w it h t he i n d i
vi d u al pro b le m s T he f o llowi n g b o o k s a r e t h o s e tha t a re
.

o f ge n er a l int er e s t o n th e s u b j e ct o f M ar k e ting .

Brace H H Or gan i zed S p ecu la ti on H o u ghto n Mi ffli n

, . .
, , ,

C o B o st on 1 9 1 3
.
, , .

B u tl er D eBo w er an d J o n e s M a r keti n g M ethods Alexa nd er

, , , ,

H am ilto n Ins tit u t e N e w Y o r k 1 9 14 , ,

.

C alk i n s E E T he Bu s i n ess of A dver ti si n g D A ppleto n

,
. .
, ,
.

C om pa n y N e w Y o rk 19 1 5 , ,
.

C heri n gt o n P T A dver ti s i n g a s a Bu s i ne s s For ce D o u bl e

,
. .
, ,

d a y P a ge ,
C o m pa n y N e w Y o r k 1 9 1 3 , , .

A dver ti s i n g B ook 1 9 1 6 D o u b l ed ay P a ge C o m pany —

, , ,

N e w Y o rk 1 9 1 6 ,
.

The Wool I n d us try A W Sha w C o m p any C hi cago ,

. .
, ,

19 16 .

C h itt i ck , J a m e s , S i lk M a n uf a ctu ri n g a nd I ts P r oblems ,

J C hitti ck , N e w Y ork , 1 9 1 3
. .

C l ap h am , J H , Woollen a n d Wor s ted I . . n d u s tries , M eth uen

C o m p a ny , L o nd o n , 1 9 07
C o p ela n d , M elvinT , Bu s i n es s S ta tis ti cs , H arvar d Uni .

ver s ity Pr e ss
,
C am b ri d ge , M a s s , 1 9 1 7 .

T he C otton M a n uf a ctu r i n g I n d u s tr y of the Un i ted S ta tes ,

H arvard Un iver s ity Pre ss , C a m b r i d ge , M as s , 1 9 1 2 .

C u rtis P u b lishing C o m pa n y , S elli n g For ces , P hil ad el phi a ,

1 9 13 .

D o nd li n ger , P T , Book of Wheat , . . P a u l Trench Tr u b ner

, ,

C o , Lt d , L o n d o n , 1 9 1 2
. . .

D o u gla s ,A W T r a velli n g S a le s ma n s hi p T he M a cm illan

. .
, ,

C o m p a n y N e w Yo r k 1 9 1 9 , ,
.

E tti n ge r R P a n d G o li e b D E C r ed i ts a nd C olle cti o ns

,
. .
, ,
. .
, ,

Pre n ti ce H a ll I n c N e w Yo r k 1 9 1 7 -
,
.
, ,

Fi s k J a m e s W R eta i l S elli n g H a r p er
,
Bro s N e w Yo rk ,
.
, ,

1 9 16 .
3 56 MARK E TIN G P R O BL E M S
Fi e l d , C li ft o n 0 ,
R etai l Bu yi n g, H ar pe r Bro s .
, N ew
Yo rk , 1 9 1 7 .

G ard n er , E H , N ew C o llecti on M ethods ,

. . R on al d Pre s s
C o m p an y , N ew Y o rk , 1 9 1 8 .

H agerty J E M erca n ti le Cr edi t H H o lt

,
. C o m pa ny
.
, ,
.
,

N e w Y or k 1 9 13 ,
.

H arri s E m er s o n P C oop er a ti on the H ap e of the C on s u m er

,
.
, , ,

T he M a cm ill an C o m pan y N e w York 19 1 9 , ,

.

H e ss H W P r oductive Adver ti si n g J P Li ppin co tt

,
. .
, ,
. .

C o m pa n y P h il a d e l phi a 1 9 1 5 , ,
.

H ollingwo rt h H L A dver ti si n g a n d S elli n g D A pp l et o n

,
. .
, , .

C o m p any N ew Y o rk 1 9 13 , ,
.

H ot chk i n W R M a n u a l of Su ccessf u l S tor ekeepi n g D o u

,
. .
, ,

b led a y P a ge C om p an y N e w Y or k 1 9 1 5
, , ,
.

H u eb n e r G G A gr i cu ltu r a l Com m er ce D A p p l eto n

,
. .
, ,
.

C o m p a n y N ew Y o r k 19 1 5 , ,
.

J acob s t ein M T he T oba cco I ndus try C o l u m b ia Un iver s ity

,
.
, ,

Pre s s N e w Yo rk 1907 , ,

J ohn s o n A P Libr a ry of A dver ti s i n g C hi cago Un iver s ity

,
. .
, ,

o f C o m m e r ce C hi ca go 1 9 1 3 , ,
.

M ahin J L A dver ti sin g S elli n g the C on s u mer D o u b l e

,
. .
,
—
,

d ay P a ge ,
C o m p any N e w Yo rk 1 9 1 4 , , ,
.

N o u r s e E G C hi ca go P r odu ce M ar ket H o u ght on

,
. .
, , ,

M ifflin C o m p a ny B o s t o n 1 9 1 8 , , .

Nys tro m P H E con omi cs of R etai lin g R o n ald Pr e ss

,
. .
, , ,

N e w Y o rk 1 9 1 5 ,
.

R eta i l S tor e M a n agemen t L as all e E xt en s i o n Uni ver s ity , ,

C h i ca go 1 9 1 7 ,
.

O n t h ank A H ea th T he T an n i n g I n dus try N ati on a l

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.
, ,

Sh awm u t B ank B o s t on 1 9 1 7 , ,
.

O p d y ck e J B A dver ti s i n g a n d S elli n g P ra cti ce A W

,
. .
, ,
. .

Sh aw C o m pany C h i cago , .

P owe ll G H ar old C oop er ati on i n A gri cu ltu re T h e M a c

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, ,

m ill an C o m p any N e w Y o rk 19 1 3 , ,
.

Pren d er ga s t W A Cr edi t a n d I ts Uses D A p p l et on

,
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, ,
.

C o m pany N ew Yo rk 1 9 1 0 , ,
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-
,

T r a di n g A W Sh aw C o m p any C hi cago 1 9 14
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R onal d Pr e ss M er ca n ti le Cr edi ts N ew York 1 9 14 , , ,

.

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, , ,
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S om e P r oble ms of M a r ket D i s tri bu ti on H arv ar d Un i ,

ver s ity Pres s C am brid ge M as s 1 9 1 5 , , ,

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Shaw C o m pa n y A W C hi cago : ,
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,
.

So nn ich s en Al b e rt C on s u mer s C oop er a ti on T he M ac

’
, , ,

m illan C o m p an y N e w Yo r k 1 9 1 9 , ,
.

St a r ch D ,
A dver ti si n g Sco tt Fo r e s m an 8 C o m pan y
.
, , , .
,

C hi cago 1 9 14 ,
.

St even s W H S I n d u s tr i a l C om bi n a ti on s a n d T rus ts
,
. . .
, ,

T h e M acm ill a n C o m p an y N e w Y o r k 1 9 1 3 , ,
.

Ti pper H H o t chk i ss G B H o lli n gw o rt h H L a n d

,
.
, ,
. .
, ,
. .

P ar s o n s F L A dver tis in g I ts P r i n ci p le s a n d P rac

,
. .
, ,

ti ce R o n a ld Pr e ss N e w Y o rk 1 9 15
, , ,
.

Ti p per H a n d H o t ch k i ss G B P r in cip les of A d ver

,
.
, ,
. .
,

ti s i n g A le x an d e r H a m i lt o n In s tit u t e N e w Y o r k 19 1 4
, , ,
.

To dd J o hn A T he Wor ld s C otton C r ops A

,
.
, C Bl a ck
’

,
. .
,

L on d o n 1 9 1 5 ,
.

We ed W H T he Ill in es Ha n dboo k W H Weed N e w

,
. .
, ,
. .
,

Y o r k 19 20 ,
.

We ld L D H T he M a r keti n g of Fa r m P r odu cts T he

,
. . .
,
.
,

M a cm il la n C o m pan y N e w Yo rk 1 9 1 6 .

,
.
 I N DE X

A u
B lk R et ai lers , 12 .

Ad di n g M achin e T r a d e , 3 1 . o
Bur ns rd e C l t h in g C m pany, 4 4 o .

A d ir o n d ack A ut o m o b ile Com u o

B t le r Br t he rs , 4 6 .

a n y,25 1 . u
B tt e r T r a d e , 1 4 2 .

Al a t r os s P a pe r C m pa n y , 280 o . u
B yi n g E xch a n ge s , 1 4 , 9 5—9 8 .

A lb e r m a rle M an u fa ct r i n g C o m u
pa n y , 292 .

Alla gas h C o m pa n 27 1 C
lb
.

Al le ghe n y Wh o s ale G r cer y o C ai r o Acces s o ry C o m pa n y, 3 32 .

o
C m pan y , 256 . C a lh ou n M a n u fact u r in g C o m
o u
Am az n R b b e r C m pa n y , 23 5 o a n y , 24 0 250
p
-
. .

oo o
A m e ri can L c m t i v e C m pa n y , o C a i fo r m a Fr u it G r o we rs
’
Ex
27 . c h an ge , 1 7 , 1 29 .

Am e r ica n Su gar R e fini n g C o m C alve rt C o m pa n y , 9 1 .

pa n y, 1 1 0 . C a n ce llat i o ns , 258 .

u
An nis q am P a pe r C m pa n y, 229 o . C a n n e d Foo d s , 2 9 2 .

A ppala ch ee C tt n M a n u fact u r o o C a n n e d G oo ds , Fu t u res , 228 .

o
i n g C m pa n y , 1 1 2 . C ar lo t R e ce iv e rs , 1 6
-
.

o
Ar m str n g, C h ar les , 80 . C ar o lin a P o t at o E xch a n ge , 1 3 4 .

At las Sign C m pa n y , 2 9 1 o . C as t in e M an u fac t u r in g C o m pa n y ,

o
n s , 1 7 , 21 , 1 22, 1 86 , 1 9 8
ti
Au c 1 17
20 C att le Lo an C o m pa ni es , 1 88 .

uo o
A t m b ile T r a d e , C att le T r ad e , 1 8 8 1 9 2 -
.

2 1 2, 2 20, 23 5, 25 1 , 26 3, 3 32, 3 4 4 . C a v alie r Bis c u it C o m p an y , 98 .

o o
A v n Sh e M an fa ct rin g C o m u u C e m e n t T r a d e , 233 .

pan y , 3 35 . C h ain St o res , 8, 58 7 2, 7 3 , 251 -

.

C h a n ce ll o r M a n u fact u r in g C o m
pa n y , 1 6 8 .

B C h at h a m C o m p a n y , 5 1 .

Bad ge r M a n u fa ct u r in g C o m pa n y ,
C h eese T r a d e , 1 4 4 .

3 C h e r o k e e O il C o m a n y , 1 1 0 .

o
Baki n g P wd e r T r ad e , 4 2, 9 2, 9 5 . C hi ca go Bo ar d o f r ad e , 1 59 .

u
Ba n n e r M a n fa ct u ri n g C m pa n y , o C hi ago G r ea t West er n R a ilr o ad ,
238 . 6 g
Bar l w, W K , 4 9
o . . . u
C hick am a ga C o m a n y , 93 .

o
Bas in g P in t Syst e m , P i ttsb r gh , u o
C h ic pee H sie ryo o m pa n y , 290 .

23 1 , 29 7 . o
C hippe w a C m pa n y, 26 3 .

Beave r H at C m pa n y , 3 4 3 o . o
C l t h i n g T r a d e , M e n s a n d B ys ,
’ ’
o
Be lg a d e Ha t C m p an y, 2 9 3 o . 30 , 4 7 , 54 , 55, 2 14 , 2 74 .

o
Be r k e ley Sh e C m pan y , 26 4 o . o
C al T r a d e , 8 3 , 1 4 7 .

o o
Be r k s h ir e P ia n C m p a n y , 3 4 3 . o
C h as s e t u
M a n fa ct r in g C o m u
o
Bill t L ad in g B rea , C e n tr a l, u u pan y , 283 .

1 79 o o o
C m m e r c ia l E c n m y B a r d , 2 1 7 o .

o
Black st n e C m pa n y , 230 o . o o
C m m iss i n Age n t , T e xt ile T r a d e ,
oo
Black w d , Willi a m , 1 20 . 1 1 3- 1 1 8.

u
Bl e R id ge S pin m n g C m pa n y , o o o
C m m iss i n M e r c h a nt , P r d ce o u
1 13 . T r a d e , 1 6 , 1 1 9 , 1 20 , 1 2 1 .

Br ic k T r ad e , 29 4 . C o m m u ni t St res , 9 4 o .

o
Br ad way D e part m e n t S t re , 3 0, o o o
C m pa n y t r es , 7 , 50 , 68 , 88 .

27 3 . o o o
C nc r d H s ie ry C m pa n y , 8 5 o .

o
Br k e rs , 1 7 , 1 10 , 1 1 2, 1 1 9 . C n gress Wh oles ale G r ce ry C o m
o o .

o
Br w n , Pe t e r , 59 .
pan y , 88 .
3 60 M ARK E TIN G PR OB LE M S
C o n se r v a t io n D iv is io n , War I n u
E lec trica l S pply T r ad e , 9 1 , 21 9 ,
d u s t r ies Bo ar d , 33 , 2 1 6, 2 6 6 .

C o ns u m e r , 3 — 6 , 2 5 , 2 70 . E lk Wh olesale G ro ce ry C o m pa n y ,
C o n ve n ie n ce G oo ds , 4 , 29 . 223 .

C o n v e yo rs 285 E 1 Wh oles ale G cery C m pan y, ro o

5
.
,

C oo pe r a t iv e As so ci t io n s a ,
Pro 5l
d u c ers , 1 7 , 1 29 139 , 1 7 3 -
. Eme rso
n C m pa n y , 1 82 o .

C oo pe r a t iv e S ale s Age n cy , M an u u t u
E q ali y R b b e C m p a n y , 2 75 r o .

fac t u re rs , 2 65 r o
’
. E ie C m pa n y, 7 5 .

C oo pe r at iv e St o res , 1 0, 7 7 80 , 90 -
. o to
E s kim S v e C m pa n y , 23 5 o .

C oo pe r at iv e Wh o les ale As s o cia ss

E e u
M an fa c i n g C m p an y, tur o
t io n s , 1 4 , 9 5 9 8 -
. 21 g
C o p p e r T r a d e , 204 . E xcelsio r Wr it in g P a per C om
C ost o f D oin g B u sin e ss , 4 2, 4 3 .
pa n y , 2 3 8 .

C o st P r ice M ar k ed o n M e r ch a n u
E xcl siv e Age n cy , 4 7 -4 8 , 5 1 , 54 ,
d ise , 353 . 9 1, 92 .

C o tt o n G oo ds T r ade , 6 9 , 1 1 2 1 1 6 , -
E xe t e r Wa g n C m pa n y , 21 6
o o .

1 83 , 258 . o
E xp rt T r a d e , 1 1 5, 1 68, 1 7 9 , 229 ,
C o tt o n T r ad e , R aw , 1 68- 183 . 234 , 27 2, 3 4 8 .

C r a ck e r T r a d e , 9 8 .

C r e d it , 221 , 335 .

C r e s ce n t G r o c e r y C o m p a n y , 95 .
F
C u r t ai n T r a d e , 5 3 .
Far m I m ple m e n t T r a d e , 74 , 107,
C u y h o ga Face Br ick C o m p an y , 2 1 3 , 220
a
.

2é l o u
Far m P r d ce , Sale b y P ar ce l
o
P st , 2 8 , 7 6 .

o u
Far rn P r d ce T r ad e , 1 5 1 8, 1 19 -

1 ‘l 5
D o
Fe rr y S a p C m pan y , 6 9 o
D ak o t a C o m p an y, 220
.

.
Fi v e T e n C e n t St r e s , 69 o
D art e r C om pa n y, 3 35
.

.
ou
Fl r T r a d e , 3 5, 89 , 1 52,
D e licat essen St o r es , 3 2 .

D e ale r Helps , 4 5, 254 , 27 8 .

Fu r E xch an ge , I n t e rn a t i n al , 200 o
D e n ni s o n M a n u fact u ri n g C o m
.

u
F r n ishi n gs , M e n s , 5 3
’
.

p an y , 3 3 6 .
u
F r nit ur e T r ad e , 56 , 1 1 8
D e p a rt m e n t St o r es , 7 , \30, 5 1 , 53,
.

54 57, 7 5, 9 0, 27 3 ,
-

D ia m o n d S t o v e C o m p a n y , 2 7 1 . G
D iam o n d S u ga r C o m pa n y , 3 6 G ar m e n t T r a d e , Ladi es R e ady ’

D ir igo P o we r C o m p an y , 227 . T o Wear , 55 , 3 33

-
.

D isc ou n t s , C ash , 2 33 , 3 33 . G e o r gian C lo t hi n g C om p an y , 4 7 .

D iscou n t s , Q u a n t it y , 334 . G o ld e n C o m p an y , 6 1
D isc ou n ts, T r a d e , 3 3 4 , 33 5- 34 0 . G oo d - Will ,
D or w a y M an u fact u rin g C o m G ood ye ar T ir e R ub b e r C om
pa n y , 2 1 5 pa n y , 2 36 , 6
W
.

D o v e r C o m p an y , 8 6 . G r ad e s , Fe d e r al h e a t , 1 58
D r o p Shi pm e n ts , 4 5, 93 , 253 . G r ai n T r ad e , 1 52 1 6 7 -
.

D r u g St o r e s , R e t ai l , 7 1 , 223 . G r a ni t e D e par t m e n t St o r e C om
Dr G o o d s T r ad e , Wh ole sal e , 90 , pa n y , 56
gl I
.

G re e n w d oo D ay , 2 6 6 .

Du l e M an u fa ct u rin g C o m p an y , G r o ce r y St o r e s , R e t ail , 4 3 , 4 5, 59,

1 é2 . 7 2, 8 8 , 9 5 98 , 1 24 ,
u ou
D n d ee Fl r C m p an y, 29 o . G r o cer y T r a d e , Wh oles al e ,
D ye T r ad e , 287 . 88 , 9 2- 9 5, 1 06 ,
252- 254 , 2 56 , 277 .

u
G ar an t ee , 255 .

E
oo
E a gl e M t r C m pan y , 212 o . H
E d gewe ar Sa fe t y R az r C o m o H am pt o n , Ri ch ar d , 9 7
pa n y , 2 3 7 . Ha r d wa r e St o r e s, R et ai l, 4 2, 49,
E gg T r a d e , 1 4 0 . 50, 6 3, 222 .
 IN D E X 36 1

Har d ware T r ade , Who les ale and Le at h er T r ade 205 ,

.

M a n u fact u ri n g 50 , 215 ,
. Le xi n gt o n Sh oe C o m pa n y 7 3 , .

u
Ha rv ar d B r ea o f B s in ess R e u u L o m b a r d y C o m pa n y 9 2 ,
.

sear ch , P ri ce P licy, 3 4 6 o . Lo n gs pu r C lo t hin g C o m pan y 30 ,

.

o
Ha wk - E ye C al C m p a n y , 1 4 7 o . Lo n gye a r Black 1 83 ,
.

H a t T r a d e , 29 3 , 3 4 3 . L u cas Jo h n C o m pa n y 4 6
, ,

o o
Ha wt h r n G r ce ry C m p a n y , 25 1 o .

He d gin g, 21 , 1 5 9 , 1 8 2- 1 83 , 1 9 7 .

o
He m a t i t e C n v e y r C m p a n y , o o M
285 .

M ail O r de r Ho uses 1 0 73 7 5
Hid e T r a d e , 1 93 , .
,
.

M a n c he st e r T c xt 1le M a chi ne r y
o
H lde n , Ja m e s , 28 C o m p an y , 2 1 1
o
H sie r y T r a d e , 1 4 , 8 5, 255 , 26 6 , M a ni t o w o c Har d w ar e C o m pa n y ,
.

50
H u dso n C o m p a n y 1 1 8
.

,
.

M a nh a tt a n P ain t C o m pa n y , 222
H u r o n Flou r C o m pa n y , 8 9
.

.
M a r k et A n a lys is , 3 , 23 4 23 5 -
.

M ar k e ts , R e t ai l P u b lic , 1 1 , 8 1 ,
1 24 .

M ar k ets T e r mi n al 1 7 1 22 1 28 -

I ce T r a d e , 1 2
, , , .

M ar ple C o m pa n y 99
I m e r 1al C o llar M a n u fa ct u r in g
.
,

M as o n Sh o e C o m p an y 3 53 ,
.

o m pa n y , 1 12 .

M ass a c h u se tts C o m m i ss 10 n o n t he
I n k T r a d e , 24 0 .
C ost of
Liv i n g, 8 4 , 1 22
o
I n t e r n at i n a l H ar v est e r
.

C om o
M ayfl we r S gar R e fi ni n g C o m u
p a n y , 10 7 .

pa n y 2 9 4
I n v e st m e n t Ba nk e rs , C h a m St r es , o
.
,

Me a t T r a de , 1 9 , 1 0 1 1 06 -
.

61 .
M err im ac Fl r M i ll1 n g C o m ou
o o o
I r n st n e C m pa n y , 4 9
p a n y , 2 65
o uo
I r q is T ype wri t e r C m pa n y , o
.

M idd le se x C m pany , 1 1 5 o .

250 .
M 1 k a d o C m pa n y , 1 00 o .

M ilk T r a d e , 1 2, 3 7 , 8 2 .

M 1lk T r ad e , E v a p r at e d , 288 o .

J o
M h a w k C m pan y , 2 5 o
Jack s o n Br o t h e rs , 26 4
.

.
o o
M n a d n ck F o d P r d cts C o m o o u
Ja ck s o n M an u fa ct u r in g C om pa n y , 4 5 .

pa n y , 88 o
M n t e r ey A t m b ile C m p a n y, uo o o
Jack so ri William , 1 9 2
.

, 31
Jaffr e y Sh e C o rrip a n y , 86
.

o
.

.
o
M r nin gside N v e lt y C m pan y o o
34 2 .

oo
M t r T r a d e , 28 8 .

K u o
M sk e g n C m pa n y , 26 5 o .

K at ah d in C o tt o n M ills , 258 .

K e ar s ar e C o m pa n y , 6 1 .

K e lly Bi 1, 3 52 .

K e n ne b e c C o m pa n y , 25 2 N
N ant u ck e t C o m pa n y 1 83
.

K e yst o n e M ills 1 1 3 ,
.

N at i o n al H rd w ar e St o res
.
,

K it c h e n w a r e T r a d c 3 3
-
.
a , I nc .
,

K n igh t C o m pa n y , 2 70 63 .

N a rra ga ns e tt Wh les a le G r c e r y o o
.

K nox B1 o w n , 28 9 .

C o m pa n , 2 7 7 .

o
N e p n se t r a p C m pa n y , 251
. o o .

o
N e w Y r k C tt n E xc h a n ge , 1 8 2 o o .

Labo r P o licie s , R e la t io n t o Sa les o

N 1a g a r a C l t hi n g C m p a n y , 2 7 4 o .

P o li c ie s , 270 .
o o o
N r f lk H s ie r y C m pa n y , 255 o .

L a c k a w a n n a C o m p a n y , 2 28 .

L a c o n ia C o m pa n y , 8 7 .

L a k e G ar m e n t C o m p a n y , 3 3 3 . O
L a p wi n g C o m pa n y , 5 7 . u u
O g n q it Gr Wh les a le o oc ery
L a u re l C lo t h i n g C o m pa n y , 54 .
“
( o m pa n y 2 53 ,

La ws o n , J K , 4 8
. . . o
O 1 1 S t v e T r a d e , 2 04 2 7 1 . .

L eas e Syst e m , 22, 205 . O r c h a r d C m pa n y , 5 3 o .

3 62 MARK E TIN G PR O B LE M S
O r d e rs , Spe cial , 2 1 4 2 15 -
. o o
R ya l P rt la n d C e m e nt C o m
O r io le C o m pa n y , 2 14 .
pa n y , 23 3 .

Os we 0 P a pe r C o m p an y, 27 2 R 0 a lt y Syst e m , 205
f
. .

O v er l l T r a d e , 4 0 . R u b er T r ad e , 27 4 -27 6 .

Oxfo r d Add in g M achi n e C o m

pan y , 3 1
S
Sa fe t y R az o r T r ad e 237 , 28 7
Sa gam o r e T r act o r Co m p an y , 39
.

P .

Pa ck a e G oo ds , 3 6 , 1 10 . Sagi n a w P ain t C o m pan y, 2 1 7 .

P ai n t r a d e , 2 1 7 , 2 22 n a w So a p C o m p an y , 2 7 2
'

. a .

P a pe r T r ad e , 21 5, e s Or gani z at io n , 2 38 .

a t s for ce M a n a ge m en t
ézl
27 2 , 240
254 , -

Pa l P ost Farm P r o d uce , 28,

g6
ce
S ar a n a
,

c Fou n t ai n P e n C om p an y ,
P e j e ps c o t M an u fa ct ur in g C o m 2 2
pa n y , 1 86 . Seb a go lVlills , 1 82 .

u
P e m a q id Au t m b ile C m pa n y, o o o Se llin g P oin ts , 2 35- 238 .

2 35 . Se m i n ole C o m pa n 254 .

P e n T r ad e , F n t ai n , 282 ou Se e ca Flour i n g C o m an
g5 p y,
.

o o
P e n b s c t C o m an y , 2 34 . .

P e ns a c la I r no rk s , 50 o o . Sh a m r o ck St o r a ge Batt e ry C o m
o
Pe n wi ck C m p an y , 4 7 .
pan y, 3 4 4 .

Pe t e rs o
C m pan y , 34 9 . Sh e n an d o ah P a p e r C o m p an y, 222 .

oo
P e tr e l M t r C m pa n y , 28 8 o . Sh e rwi n - Williams C o m p a n y, 4 6 .

o
Pia n T r ad e , 3 Sh oe St o r es , R e t ail , 4 4 , 7 3 , 8 6 , 27 3 .

u
Pittsb r gh Bas in g P in t Syst em , o Sh o e T r a d e , Wh olesal e a n d M an u
fa ct ur in g, 1 , 1 3, 8 6 , 264 , 33 5,
P lym ou t h Dye C om p an y , 287 . 3 53 .

P o n d C o m pan y , F Sh o ppin g G oo ds , 4 , 2 9
P o n t ia c Millin g C o m pa
. .

n y , 223 . Sie gel C o m pa n y , 55 .

P o t o m ac M ills , 6 9 . Silk T r a de , 30, 57 , 1 16 .

P o tte ry T r a d e , 3 3 . Sm i t h , Br o wn C o m pan y, 7 3 .

P r ai rie Dr y G oo d s C o m pa n y , 90 . Sm i t h , W K , 4 7 , 55
. . .

P rice M ai n t e n a n ce , Re s al e , 3 4 9 . So ap T r a de , 6 9, 98 251 , 27 2
p ar an E le ctri c Co m p an y, 2 19 ,
.

Pr o ct er G am ble , 98 .

t
22i
Spe cialt y Sal esm e n , 9 3 .

pe ci al ty S t o r es , 7 .

pe c u lat io n , O r gani z ed , 21 , 1 59 ,
Q u o t as for Salesm e n 25 1 , .

1 82- 1 83 , 1 97 .

Sq u a n t u m P ap er C o m pan y, 3 4 8 .

Sq uir e , Jo h n P C o m pan y , 1 05
. .

R St a n d ar d O il C o m p an y , 1 09
R ai lr o a d , C hi ca go G r e a t West e r n , St a r P ape r C o m p a n y , 2 1 5
8 . St e am T u r b in e T r a d e , 227 .

R a v e n M an u fac t u ri n g C om pan y , St eel T r a d e , 203 , 2 30, 29 7 .

29 . St e ph ens As h u rst Bill , 3 50

-
.

R e d Wi n g M illin g C o m pan y , 1 52 . St e v ens , C h ar les K , 5 8 . .

R e t ail Br an ch e s , M an u fa c t u r e rs , St o ck D e part m e n t , 1 1 7 , 2 1 5
’
.

St o ck i n M an u fac t ur in g C om
Re t ail Br a
’

n ch e s , Wh ole s ale r s p an y, Acce pt in g fo r P aym e n t ,

’
91 .

R e t ail Wh olesale St o r e , 7 , 50 . 21 1
R e t ur n e d G d s , 256 oo . o
St ck in M an uf act ur i n g C o m
o o
R a n k e M an fac t r in g C o m u u p a n y, Sale t o C us t o m e rs , 4 9 .

p an y , 4 1 . St o ck s an d P r ices , 203 .

o oo
R binh d Flo r M ills 289 u ,
. St o r a ge , C ol d , 1 40 .

o
R ch d ale P lan , 1 1 , 1 5, 7 7 . St o v e T r ad e , 23 5, 276 .

o
R gers Br wn , 4 3 o . S tr aw , J G , 221. . .

o
R ge rs , G r ay C m p an y , 1 14 o . St u m b lo P o tt e ry C o m pan y , 3 3 .

Ro yal Flo ur Mills , 270 . Sud b u r y C o m pan y, 7 2 .

 IN DE X 363

Su ga r T r a d e , 3 6 , 1 10 , 1 50 , 29 4 Um d St at es R u b be r C o m pa n y
gi
.

S us q u e h a n n a M a n u f a c t u r i n g
,

2
C o m p a n y , 286 .

Swee ts C o m pa n y o f Am e r ica , I n c , .

70 .

V
V ar ie t y o f Pr o d u cts 33 2 1 5 2 19 , ,
- .

T V i ct o r C o m pa n y 2 70 ,
.

T alkin g M achin e T r a d e , 2 38 .
V ir gi ni a St o v e C o m pa n y 27 6 , .

T a n a ge r Br eak fast F d C o m oo V o lt E le ctr ic C o m pan y 227 ,

.

p a n y , 3 34 .

T e xt i le Ban ki n g C m pa n y , 1 1 6 o .

T e xt ile M a chi ne ry T r a d e , 21 1 .

T h r ee- Wa y P la n , 4 5 . W
o
T it a n C m pa n y , 53 . Wa go n R et ai le rs 1 2 , , 8 2, 83 .

o o
T b a cc T r ad e , Le af , 198 . Wa go ns Fa r m 2 1 6
, ,
.

o oo
T ile t G d s 7 5, 254 .
Wat e r T u r bin e T r a d e 2 1 9 ,
.

T m a t T r ade , 8 7
o o .
Wat e r Wh e e l T r a d e 234 ,
.

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T n a wa n d a H sie ry C m pa n y , o Wat k i n s C o m p a n y 1 73 , .

29 . We at he r he a d C o m pa n y 1 23 , .

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T l T r ade , 99 , 27 1 .
We llfl ee t C o m pa ny 7 5 ,
.

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T r ac t r T r a d e , 39 , 2 20 .
Wh it e C o m pa n y 1 1 6 ,
.

T re llis e s , G a r d e n , 2 8 3 . Wh it e St a r Far m M ach ine ry

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T r ip d Re t ai l G r ce ry C m pa n y , o o
C m pa n y, 21 3 .

45 . Wh lesa le Br a n ches , M an u fac

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T we n t y-fi v e and Fift y C e n t u
t r e rs , 18 9 8— 109 , 205, 222
’
, .

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St res , 6 1 .
Wh les ale G r ce rs Sales C o m
o o
T ype wri t e r T r a d e , 250 .
pa n y , 84 .

Wh les ale M e r ch a n ts , 1 3
o .

Wh les a le rs , C a t al g e , 1 4
o o u .

Wh les ale rs , S pe cialt y , 14

o .

Un io n War eh ouse Co r po r at io n , William s , F K 4 2.

1 78 . Wils n , Ja m es , 7 4
o .

Uni t St o r es , 6 , 4 1 . Win d e r m e re D ry G ds C o m oo
Uni t e d D r u g C o m pa n y , 7 1 .
pa n y , 3 4 l .

Uni t e d Sh o e M a chi n er y C o m W dc ck
oo o E ld rid ge 87 , .

pan y , 22, 205 . W l T r ade , R a w, 1 83 - 1 87

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