The Democratic banner. (Mt. Vernon, Ohio) 1898-192?, 1910-08-26
CAN MAIL ORDER HOUSES SELL
DEPENDABLE MERCHANDISE
CHEAPER THAN HONE
MERCHANTS?
BY o. A. CHARLES.

aDiS lue lnSItudHJ 10 sell CueHply one
OF the most importnt features of busi.
ness is the cost of operating, or, as
more commonly spoken OF, the per.
centage Of overhead expense.
To determine whether or not the
mail order house can sell goods more
cheaply than the home merchant It
will be necessary to see what is the
ratio Of overhead expense Of the mail
order house In proportion to the vol
ume Of business done By this mall Or
der house.
Assuming the statements as. print.
Cd In the catalogue OF very
large catalogue house. in fact one OF
the largest in the world, are correct,
we find that this house claims to have
= capital Of over $4,000 900, half of
which is invested In real estate in
Chicago and factories all over the
United States. ANY business man will
tell you that money tied UP In real
estate IL not available as working
capital for a mercantile house and is
subject to q higher rate of taxation
than any other class of property.
Then II this mail order house has
half Of this forty million dollars tied
up In real estate which is used entire
ly for Its own business, therefore
there are no other revenues other
than those coming direct from It's
business; then $20,0O0,00O worth of
real estate taxed at the rate OF say
S.6 per cent would mean that this
mail order house was paying taxes on
its real estate alone to the amount of
100000 per year.
In additio7 to this they would have
insurance, maintenance. city improve
ments and numerous other items OF
expense, all Of which would make
their total cost for real estate at least
s1.Ooo.0oo, per year.
This same house states in their cat.
alogue that It has nine thousand EN-.
ployes in It's Chicago plant alone, to
say nothing Of the thousands CT work
men, mech;-aics, foremen, surerinten.
dents. etc.. Of Its numerous fa tories.
These nine thousand employees are
employed not IN the producing Of the
merchandise they sell. but In the dis
tributing; consequently wcuil come
under the head of operating or over
head expense.
Some Of these are very Highs ,laried
executives, managers adv "tsing
men, correspondents, buyers. clerks
experts, ETC., and taking them as a
whole a very conservative average of
their salaries would be at least $25
per week each; then the payroll for
one year for the operating of this
house would be eleven and quarter
million dollars.
This same house claims in their
catalogue that they publish $4,000
catalogues per day; with 800 working
days in the year. they would print
over 100000 per year. They also
claim that these catalogues cost them
81 each and 25 cents for mailing,
which makes eight and three-quarter
million dollars more expense.
They use nearly two million wood
en- boxes yearly, which at the very
small cost of 10 cents each would
cost one-quarter of million dollars.
The heating and power plant of
this house has capacity of 100 tons
of coal every hour; suppose that they
use one-eighth of this capacity twelve
hours per day, they would use $50
tons of coal per day or $4,000 tons
per year, which plus the freight would
cost them at least SO per ton. This
gives us $4,000 more expense We
could go on enumerating these ex-
penotS llluSIHitSiy, ouSu do tnS COoI
of electric light, the keeping of a
thousand head of horses, inbound
freight and, express, etc, but using
these figures as basis, we would say
very conservative estimate of the
operating expenses OF this house
would be at least $2O,O0O,OO0 per year.
Now, quoting further from their cat
alogue, we find that-using their fig
ures--they sold over fifty million dol
lars worth of merchandise in a year,
let us say sixty million dollars. Then
their operating expenses would S3 13
per cent of their total sales. Now,
then, with the operating expenses
alone amounting to one-third Of their
total sales, does 1t look reasonable
that with the other two-thirds they
coud keep dozens of large factories
running, pay salaries Of hundreds Of
managers, wages to thousands OF
workmen, control the output of nu-