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woolen goods and cotton goods, this difference should not appear in all classifications.
Shortly after the passage of the Act to Regulate Commerce, the carriers materially relieved the situation by consolidating many of these classifications into one. To-day there are but three interstate classifications, while ten of the forty-eight states have issues of this sort, the state issues applying to state or intrastate traffic, as it is called.
The reduction in the number of issues of this kind, satisfactory as it may seem, still leaves much to be desired. This lack of uniformity has been so interwoven into the fabric of transportation charges that the various rate adjustments are honeycombed with inconsistencies which, in many cases,
assume the proportions of destructive discrimination, and which account for the loss of much business and necessitate the services of a competent traffic expert to bring order out of chaos.
There are over 1,600 individual transportation companies in this country. There are numerous ratemaking agencies maintained by these carriers, and the carriers and their agents both issue schedules that have to do with the charges demanded of, and collected from, the shipping publio.
In many cases the preparation of these schedules follows definite and systematic plans; formulas have been evolved after years of experiment and consideration. In other instances, charge may be made by the “rule of thumb,” that is to say, whatever the traffio manager of the transportation company deems the traffic capable of paying.
It is surprising indeed to those intimately acquainted with the intricacies of this situation to observe the
seeming indifference of a great many prominent manufacturers and merchants as to what they pay for transportation. Hard-headed, shrewd business men may insist rigorously on the careful audit of material, operating and overhead expense as to quantity, quality, and disposition, and yet may approve the payment of bills for transportation with a disregard for their accuracy that borders on idiocy.
This may perhaps be due to the fact that transportation is not regarded by them as a staple article of barter and trade, as much so as an automobile, a consignment of pig iron, or a ball of string.
The successful manufacture of goods is contingent upon the proprietor's ability to draw crude or unfinished materials into a plant, convert them into a finished product, and distribute it at a profit over the widest possible area.
“The consumer pays the freight” is a common expression. Certainly it is reasonable to expect that the cost of labor, advertising, material, equipment, overhead and all other items of expense, perhaps also a jobber's or wholesaler's profit, be distributed over the product of an industry and thus passed on to the purchaser. However, the one great point frequently overlooked is that the ultimate consumer is not going to pay any more than he has to for articles or commodities of equal value to him.
The inability of a salesman to "open up" a territory or to dispose of his wares in certain localities is more often than otherwise due, not to his failure as a salesman, but to the existence of a more favorable rate adjustment applying on the output of a competitive house.
Illustrating this point, the following tabulation from the Weekly Farm to Table Bulletin of the Wells Fargo & Company Express, tho elementary, is quite significant:
Country Cost Delirered
Cost Per Doz. Per Case
14.10 Bolivar, Mo..
.4114 12.45 Fresh eggs Douglas, Minn... .40
12.90 30 doz. lots Ft. Wayne, Ind...
This bulletin is distributed locally in Chicago and vicinity. It affords the rural population an opportunity to market in Chicago certain products directly to the consumer; it offers the consumer a better article without the middleman's profit. From the foregoing tabulation, it will be observed that the range between the highest and the lowest prices is 734 cents per dozen, or $2.32 a case. Obviously, the consumer, unless he is given to throwing his money away, will buy where the article delivered will be the least expensive.
Too many rural residents believe that if eggs are selling for 50 cents in Chicago, the consumer there will gladly pay this plus any cost of transportation. This is also the attitude of many of our merchants and manufacturers toward their out-of-town patrons.
The price of eggs, coal, automobiles, or any other commodity is susceptible to several factors, among which the more important are (1) supply, (2) demand, (3) the competition of other articles, and (4) the Resumer's ability to pay.
he supply is contingent upon the natural resources unge manufacturing capacity, or upon both. The
demand is influenced by the necessity for its use and the ability to pay the price demanded.
To illustrate, there is a certain number of dairy cattle in this country. These cattle produce a certain amount of butter-fat which is available for the manufacture of butter. A certain expense is incurred in the operation.
Butter is regarded by many as one of the necessities of life. Time was when butter could be purchased for 10 cents a pound. To-day in metropolitan centers, butter commands a price ranging from 40 to 60 cents a pound, or more.
Disregarding the ethics of this increase, its effect has been to curtail the sale of butter.' The income of a considerable portion of our population will not permit the payment of such a price and as a result turn to substitutes, some of which are so satisfactory as to find immediate favor and to wean the purchaser forever from the idea of paying prohibitive prices for butter. As a consequence, a portion of the trade is lost.
A great many industries, commercial houses, and individual shippers may be likened to the egg merchants used in the illustration who fail to appreciate the force of transportation cost as applied to their offering.
Not long ago an automobile dealer was approached by a traffic expert who desired to interest him in establishing a traffic department.
“No, sir," the dealer said, “I do not need the services of a traffic man, since I buy and sell all my machines F.O.B. Chicago."
"Well, now," said the traffio man, "your remarks confirm my opinion that you do need a traffic man. As you deal in second-hand automobiles, I suppose you have
numerous inquiries from out-of-town prospects."
“And like any other business you sell only a comparatively few of the prospects who inquire.”
“Now, have you ever followed up these inquiries to ascertain why you did not make the sale?”
“Yes, and in those cases where the inquiry was from a bona fide prospect who ultimately purchased a car, we found that in the western territory he had bought in St. Louis, Indianapolis, Milwaukee, or in some other place nearer to his residence.”
“Precisely so," said the traffic man. price f.o.b. shipping point of a certain model or a given make of car is the same as that of a dealer in some other locality, the prospect is going to consider transportation costs in making his purchase. So you must be informed of the transportation costs and must shrink your selling price to offset the advantage of location and the contingent advantage in freight rates of your competitor. On a light car, for example, if the selling price in St. Louis and Chicago is the same, a customer in Kansas or Nebraska can purchase in St. Louis to advantage because his transportation charges will be from $4 to $20 per machine less than if he buys it in Chicago. The Chicago dealer is at a disadvantage and must shrink his selling price and his profits if he wishes to make the sale."
The purchase of automobiles, eggs, or any other commodity is governed by the same rule—the purchaser is going to buy in the market that will yield him the lowest aggregate cost. Only a competent traffic man will know how to meet such competition, how to prepare intelligent sales charts, and how to reduce transę