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CHAPTER V.

THE FARMER AND THE TRADESMAN.

RADESMEN-meaning especially retail tradesmen— seldom make as much money as farmers suppose. In

the first place, the actual cost of transacting a retail business will vary froin fifteen to twenty per cent upon the value of the goods sold, depending upon the amount of business done. A very large retail establishment may reduce cost of carrying on business below fifteen per cent, and a retailer in a town or city is in danger if his cost runs above that. But upon many articles, like sugar and flour, whose wholesale cost is known to the public, the profit is usually less than fifteen per cent. It is essential, therefore, that at least equal quantities shall be sold at a profit greater than is required upon the average, to cover the cost of business, or it is only a question of time when failure must follow. There are also other losses, notably bad debts and dead stock. The dealer will try to purchase only what he can sell, but he is as liable to error as other people, and accumulates unsalable stock, which becomes shelfworn and must be sold for whatever it will bring. While an estimate of fifteen per cent upon the "turn over" may be assumed to cover depreciation and bad debts, whether or not it actually does so depends mainly on the good judgment of the tradesmen. A little calculation will make this plainer. If a small dealer puts $3,000 into stock, and "turns" his capital three times a year, his annual sales will be $9,000, upon which fifteen per cent will be only $450. It is evident that in a business conducted on so small a scale, fifteen per cent will not pay cost of transacting it, but with an average profit of twentyfive per cent, yielding $750, the dealer can live, if he has help in his own family, and does not make too many bad debts. For retail stores, such as the farmer most commonly deals. with, an average profit of twenty-five per cent is necessary if

the business is to be profitable. As the volume of business increases, the percentage of expense runs down very rapidly, and in such wholesale trades as I am most familiar with, may not exceed five per cent. A gross profit of ten per cent on staple goods is quite satisfactory to wholesale merchants.

The retailer who sets out to make his profits average twenty-five per cent of his sales, must charge a very much greater profit on many of his goods, since competition compels the sale of many staple goods so low. The large profits are made on goods whose cost is not generally known, such as olive-oil, extracts, "repairs" to farm machinery, and numberless other articles of the kind. Upon the whole, it seems to me that the small retail tradesman is about in the situation of the farmer. His invested capital is the price which he pays. to assure himself permanent employment. If he ever sells out his business, he will be lucky to get his money back. Very few accumulate much, although the percentage of accumulating men in retail trade is doubtless in excess of that among

farmers.

A good retail dealer is a great convenience in a country neighborhood. If it were not for one in the vicinity of my home, we might sometimes have to send twenty miles for a spool of thread-the seamstress meantime waiting. But if the retailer is to stay there, he must live, and if the most of the trade goes to larger towns, or to wholesale stores in the city, he must necessarily charge roundly for whatever goods he does sell. Especially, if the most of those who can pay cash carry their trade to the city, leaving him only the trade of the slowpay or never-pay customers, eked out by odds and ends from the better class, he is absolutely compelled to charge prices to cover the risk, and he does. Some dealers of this class are very shrewd, and encourage indebtedness until the time. finally comes when they demand a mortgage, which, later, they foreclose.

The real question for farmers to consider is, how they can best assure the convenience of good retail stores in their vicinity, without paying exorbitant prices for their goods There are two courses open: they may continue to take their

cash to the larger market, and uncomplainingly pay the high prices for whatever they are compelled to buy locally, or they can contract to give the local store all their trade, paying cash, at an agreed profit upon actual cost to the dealer. When the trade of an individual is large, this last arrangement can ordinarily be made, provided the dealer feels confident that nothing will be said about it. It will not usually pay him to get only one customer at the expense of letting the whole neighborhood know his scale of profits. It is quite customary -and it is an excellent custom-for granges, or other farmers' societies, to buy at wholesale, for cash, and distribute to their members. It will frequently, if not usually, happen that quite as much profit, and far more convenience, will be gained by working the trade through the local dealers. In the first place, the dealer, if in good credit, can usually buy cheaper than any grange. It is entirely common for granges ordering from wholesale dealers, to imagine themselves to be getting the lowest net rates, when, as a matter of fact, a local dealer may be regularly receiving a percentage on all their purchases. There are many wholesale firms which will fill orders from such bodies at what they term "wholesale rates," and credit any customer in the town with a fair profit on the transaction, or, if there be two customers, divide it between them. The reason is that the trade customer buys more goods than the farmers, and is likely to buy much larger, and it will not pay to offend him for the profit to be made on a few direct orders from those who should be his customers.

Still, if the grange buyers spend time enough and study enough to keep fully in touch with the market, they can obtain, for such ordinary goods as they buy, lower prices than the local dealer can make for them under any circumstances. They can hunt until they find some wholesaler from whom the local dealer does not buy, and who will not therefore care about "protecting" his trade. Even this, however, is not certain. I have known a wholesale house to fill such an order, and credit a profit to a dealer who was not dealing with them at all. A little later, of course, the dealer's trade will be solicited, and some part of it probably obtained. It wil

take farmers a long time to understand all the tricks of trade. It is a question whether it will not pay them best to work with the local dealer. It depends, of course, upon circumstances, but as a rule I think most money will be made in that way by the farmers.

But one thing is sure: if the farmer becomes seriously indebted to the local tradesman he will pay roundly for his folly. This is not, necessarily, because the dealer is a grasping, hard-hearted man, but because he must charge high prices to pay for the risk. For some of the goods sold on credit he will never be paid. He can not tell which these will be, or usually would not sell them, but it is a necessity of business that those who pay must help to support those who do not. The dealer can not bear the entire burden. Those who can pay cash, however, need not pay any part of these bills unless they choose to. If, as already said, one's trade is large, he can manage this matter individually. If it be small, he can only obtain this benefit by combination with his fellows.

I have but one thing farther to say upon this subject, which is that all retail trade is infected with fraud. If a farmer buys ground coffee or spices, oils, paints, or even flour and sugar, he can not be certain that he gets what he pays for. The demand of the farmer for "cheap goods" induces extraordinary efforts to supply it. This is done by manufacturers who adulterate goods, or skimp the weight of packages at the demand of retail dealers who wish to be thought to sell cheaply. It is well to beware of all who pretend to offer extra inducements in the way of prices. The manufacturers and wholesalers usually make no more money on sophisticated goods than upon those which are honestly made, or put up. The retailer, if he at all understands his business, knows perfectly well what he is buying. He should be held rigidly accountable to customers for quality and weight. All persons dealing with concerns having a special reputation for low. prices should faithfully check off goods bought by weight or measure. The cost of goods is about the same to all retailers in good credit, and except as they transact specially large volumes of business, their scale of profits must be about the

same. Still it is true that the retailer with a surplus of available cash capital can save money in buying, just as the farmer can. No general rules can be laid down other than those already suggested, as to the best profitable methods of dealing with retailers. It will depend upon the circumstances of each case.