FULL VALUE RECEIVED Reprinted from an Article by Louis E. Kirstein, Wm. Filene's Sons Company, "We in the retail field have been as eager to expand the volume of our business as anyone, and the persistent upward trend of our expense ratios well testified to the price we have paid for volume. But I firmly believe that the great majority of our expense items are necessary. Our customers demand not only service by intelligent, tactful, and welltrained salespeople, but also the privileges of credit, delivery, and exchange, modern equipment in the store, and many things heretofore looked upon as luxuries. "Indeed, the multiple services demanded by our customers are nothing but a reflection of the constantly rising standard of living. With increase in incomes, and with the complexity of modern urban life, our middle classes are in easy proximity to shopping centres, deliveries, charge or deposit accounts, returns, and the other innumerable services covered by the term 'merchandising' in a retail establishment. It is nothing but an accident that, being closer to the great mass of consumers, the retailer is charged with the cost of these services. "It is argued that there is a tremendous waste because of the manufacture of a multiplicity of styles. Here again we may refer to shoes, for undoubtedly it would be much more economical even if the monotony of sameness proved deadly if everyone wore the same kind of shoes and owned at any one time two or three pairs at the most. But consider the limitation which would automatically be placed upon factory production under any such plan, where advertising and selling did not create a style conscoiousness in the wearer and thus build up the necessary market... "It is sometimes said, also, that the cost of distributing automobiles is too high. It is reported that a certain inexpensive automobile can be taken from the delivery line with a production cost of less than half its customer price. Is this the fault of the distributor? Is he, in fact, to be blamed for his share of the cost of the car, or to be credited with making its quantity production possible?... "This leads me to observe that a good deal of confusion exists between the terms 'want' and 'waste', or 'luxury'. By way of illustration let me menticn tobacco, silk stockings, and cosmetics. I need not recite the history of the development of the tobacco industry, nor attempt to classify it as a luxury or a necessity. No one can deny, however, that it is one of our important industries. Over a billion and a half pounds of tobacco are produced annually in this country alone. It is exported to 99 other countries. It employs over 100,000 wage earners in over 1,000 factories. It contributes over $400,000,000 in federal taxes. How many people are engaged in selling it at retail I do not know, but the number must be enormous. By some, this whole industry might be classified as waste. "No better illustration of the development of today's necessity from yesterday's luxury can be shown than in the silk-stocking industry, and who is to classify such things as cosmetics, hair-dressing, and other items of personal appearance? Consider the importance of the industries which depend on retail distribution of furs, perfume, jewelry. There is scarcely an article we wear which does not contain a good deal of the luxury element, but to say that this element is waste is to ignore completely the importance of the distribution of these products in the sum total of employment in the country. "President Roosevelt has indicated the desirability of reaching an annual national income of 90 billion dollars, which is nearly 9 billions larger than the highest previous income of the country and 20 billions higher than the figure for 1937. It is clear that if the increase of 20 billions, which would be required to raise the 1937 figure to the proposed amount, came simply from a general elevation of prices by approximately 30 percent, there would be no more work done, no more articles made, and no employment benefit as a result. We must assume that the intent is to produce many more goods and services of all sorts. Even granting that a large part of this may well be in the form of necessities. I venture to assert that the total cannot be reached without greatly increased consumption of out-andout luxuries and items which have a luxury element." STATE "PROTECTIONISM" THREATENS EFFICIENCY, SAYS WRITER From "Death by Tariff - Protection in State and Federal Legislation", by Raymond by the University of Chicago Press, Chicago. "The forces of protectionism continue to rally their battalions in an attack against efficiency and lower-priced goods. The New England farmer says it is no use trying to grow vegetables in competition with Florida and California, while the New York dairy farmer complains that Wisconsin can undercut his cost of production and protests against the 'dumping' of out-of-state milk in his market. Industry, labor, and agriculture all demand protection; sectional and state tariff walls are rising which, unless checked, will restore the unsettled conditions prevailing under the Articles of Confederation. The arguments that at one time we confined to the foreigner we are now turning against ourselves. "Long before protectionism arrives at its logical conclusion, a reaction will, nevertheless, have occurred. The great masses of the American people have come to believe that, as the result of modern technology, it has become possible to produce enough goods to provide a truly abundant life for the entire population. And if the present economic system continues to move in a vicious protectionist circle, under which the efficient production of goods is restrained, then the American public sooner or later will rise up and demand the abolition of an economy of scarcity in favor of an economy of abundance through collectivism. Such is the danger confronting American business today... "The outstanding reason why every economic interest grasps at protection is because of a declining market. When business is good, when the national income is high, when the capital market is open, the demand for protection subsides. It is significant that many of the interstate trade barriers described above, including anti-chain-store legislation, have multiplied during the present depression. When markets vanish and inventories accumulate, the obvious solution is to cut down the supply by protective means. The process defeats itself, for when sellers are excluded from the market, buyers also are injured. "How can the market be restored, and how can purchasing power be established? Only by one of two means. Either by frankly embarking on Either by frankly embarking on a policy of wholehearted political collectivism, or by returning to a competitive low-price economy. If the latter goal is to be realized, government must create the conditions which will make the investment of private capital attractive. On the other hand, industry must be willing to pass on to the worker and consumer most of the gains arising out of technological progress. This means production of more goods at lower prices and a lower margin of profit than in the past." LATEST RELEASES OF THE CENSUS BUREAU Census Survey of Business: Chains. Wholesale Distribution 1937-38 - Retail Distribution Grocery Chains; Shoe Store Dry Goods; Hardware; Meats and Provisions. Census of Manufactures: 1937 Summary by Industries; Plastics; Sheet-Metal Work, Not Specifically Classified. Financial Statistics of State Governments for 1937 - North Carolina; Oregon. Copies of the above releases are available free from the Census Bureau, Washington. CASH FARM INCOME AND GOVERNMENT PAYMENTS IN 1938 ESTIMATED AT $7,632,000,000 Farmers received a total cash farm income, including Government payments, of $7,632,000,000 in 1938, it was estimated January 20 by the Bureau of Agricultural Economics. The 1938 income compares with the revised estimate of $8,574,000,000 for 1937 and with $7,944,000,000 received by farmers in 1936. The complete statistical release is available from that Bureau, Washington, D. C. PERCENT OF TABLE 1.-SUMMARY OF TOTALS FOR ALL MANUFACTURING INDUSTRIES: 1937, 1935, AND 1933 (Because they account for a negligible portion of the national output, plants with annual production valued under $5,000 have been excluded since 1919) Wagos 4/- Cost of materials, containers, fuel, electric energy and contract work: D (A) Including cost of contract work--- (B) Excluding cost of contract work--- Value of products 4/5/------- Value added by manufacture: (A) Comparable, 1937 and 1935 2/ (B) Comparable, 1935 and 1933 8/- $2,716,473,756 $10,112,808,089 $55,536,139,648 (6/) $60,710,072,958 $25,173,933,510 1/As no data are included for 1937 for "Gas, manufactured, illuminating and heating" or for "Railroad repair shops," the figures for 1935 and 1933 have been revised 2/ The figures for 1933 do not include data for number and compensation of salaried officers of corporations, and therefore are not strictly comparable with the cor- can 4/ Profits or losses can not be calculated from the census figures because no data are collected for certain expense items, such as interest, rent, depreciation, #21042 800 item From "Census of Manufactures: 1937, Sunnary by Industries" |