Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1917-11-15
WHOLESALE AND RETAIL PROFITS

What is a fair profit for a merchant to make on
his goods? Should a wholesaler or a manufactures, make
more or less profit than a retailer, and why? Everything
pertaining to profits and prices is interesting Just now,
and these questions are presenting themselves in various
forms.
In & neighboring city the price Of bread has been Eun-
der discussion. The bakers say that their margin Of prof
1T has been cut down as low as possible, and that il there
is to be a material reduction in price it must come
through a reduction in the profits Of the retailer. The
statement Is made that at the prices now maintained in
that city the retailer is making a profit of one cent a loaf,
This is presumably a small loaf, as in another portion OF
the article the retail profit is stated to be Is per cent.
This, the bakers say, is very much larger than their
profit.
The use of the word profit in such cases is mislead.
ing. The difference between the purchase price, or be-
tween the manufacturing cost price as often computed
and the selling price is not profit. A dealer might sell
every article that he handles at a uniform advance over
the purchase price of 10 per cent, or rs per cent, or 100
per cent, and still lose money. His expenses might eat up
all the advance and leave him no profit whatever. What
is commonly termed profit is the sum added to the pur-
chase price of goods out of which must be paid all the ex-
penses of doing business, and If there is ANYTHING left
that is the merchants profit.
Among the items of expense are rent, light, heat, in
terest on investment, depreciation of plant, clerical and
other help, delivery service, and a number of other items
which will readily occur to any one who gives a moments
thought to the subject. 1t is evident that the greater the
volume of business the smaller will be the relative cost Of
these items. Therefore. in the business that is large in
volume, the advance on each article may be much small
er than in the smaller retail business and still the actual
profit will be as great.
The price of bread and of many other things is very
properly being made the subject Of official investigation
and of regulation. But If we are to avoid confusion in
these matters we must remember that the difference be-
tween the first cost: of an article as it leaves the hands
OF the manufacturer and the final cost as it reaches the
hands of the consumer represents a good deal more than
a succession of profits. In addition to the cost of trans
portation there are the costs of various items involved in
handling and distribution, all of which cost money. and
for all of which somebody must pay.
The effort of the government under these war con-
dltlons Is to keep profits at a reasonably low level, that is,
to prevent the extortioner from taking advantage of the
necessities of the people. This is wise <and sound. But
effort should also be directed. as it is being directed in
many cases, to the elimination of waste in handling. to
have goods passed from their original source to the ulti-
mate consumer with just as few motions as possible. Out
of this waste, when unnecessary motions are made, when
the methods of distribution involved are indirect, nobody
profits. 1t is to the interest of every group in our society
that the processes be simplified as much as possible, and
we have abundant evidence that there is ample room for
simplification in many directions.