The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1919-09-10
TOPEKA STATE JOURNAL
INFORM ALTON
BURE AU
FREDERIc J. EAsKnI. Dtr~cGne.
wa1hiaEtsa. D. q
MORE LIGHT ON HIGH PRICES

MORE LIGHT ON HIGH PRICES.
washington, D. c., Sept. What
does 1t cost to make the manufactured
articles which you use every day?
You have no ida. Well. here is an
example. 1t is said that a certain
popular safety razor which sells for
SIS is made at a shop cost of less thar
one-tenth OF that amount.
Shop cost includes labor. materials,
interest on the actual investment in
machinery, and the amount involved
1t does not include the salaries of ex-
ecutives. and other purely administra-
tive expenses. 1t Is the actual cost of
making the article.
1t is said that the man who de-
signed and first made this razor, for
less than half a dollar. intended to
sell 1t for 81. He would have made
nice profit at that figure and could
have done a certain amount of adver-
Using. which is, of course absolutely
necessary
His business associate expressed the
opinion that the razor could be sold
for much more than 81. The inventor
disagreed. They ended by forming
two corporations "a manufacturing
company and a sales company. The
sales company bought the output of
the manufacturing company at 81 for
each razor, and sold the razors for SIS
each. Moreover 1t sold millions of
them all over~the world. African
chiefs and South Americans and Rus
slams have corroborated the Judgment
of the sales manager that the public
would pay SIS for so cent razor just
quickly as it would pay 81.
OF course, to the shop cost Of less
than fifty cents. must be added the
profit, and all costs of selling and dis
tribution. But these things, from an
economic viewpoint should not amount
to ten times the cost of producing the
article. And that this razor can be
retaiIed for much less than five dol
lars is conclusively demonstrated by
the quartermaster Of the army, who
sells it in his stores, lin a khaki case
with six extra blades), to soldiers for
s1.75.
In a word, the price for which this
razor is sold represents an enormous
percentage OF economic waste 1t
brings home to US two things. In the
first place. we have no idea what most
of the things we buy are really worth,
and for that reason the price often
bears little or no relation to the value
OF the article. And in the second
place We have a wasteful system of
distribution.
OF course, no one bIames the pro-
moter of this razor for selling his
product for five dollars. There are
no reflections to be made upon his
personal integrity or that of his firm.
1t is merely the economic principle
that is questioned.
ceptional. A brief examination of the
matter Of shop cost shows that the
American people pay for the manufac-
tured goods from six to>fifty times as
much as it costs to make them. The
significance of this fact scarcely needs
mount factor in the high cost of living.
Why prosecute a Greek corner grocer
for making an extra penny on a pound
of sugar when the prices we pay for
many articles OF daily use have no
relation whatever to their value?
A very different example of the
same thing is seen in the case of the
electric current which is used in al
most every urban American home. 1t
is a fact well known to engineers and
other technicians that 1t costs, in nor
NAL times in this country, from one
half to three-fourths of a cent per
kilowatt hour to make electric cur
rent in quantity by burning coal. The
government buys its current from 10
cal companies for cents per kilowatt
hour in large quantity. The public in
most places may have to pay 10 cents
rent-that is from fifteen to twenty
times as much as 1t costs to produce
the current.
It may be argued that the other 9
cents is cost of distribution, but the
argument will hardly hold. 1t costs
less to distribute electric current over
a. wire than it does to distribute other
commodities by auto or horse power.
Yet almost any commodity can be dis
tributed in the latter way for far less
than 800 per cent of its value.
And besides, the companies that
supply the government current at
cents are not losing money. This dis
crepancy between shop cost and SELL
ing price. represents economic waste,
and Is a large factor in the high cost
of living. There is no intention here
to fix, or even suggest blame for this
waste. 1t may be due in part to the
charging of excessive profits by the
manufacturer, the wholesaler, the re-
taller, or all three. 1t may be due in
part to wasteful and inefficient meth
DDS on the part of one or all OF these
factors. It may be due primarily TO
the fact that our whole industrial sys-
time is loosely and Iinefficiently or
ganized.
The important fact is that this enor-
nous leak is draining the pockets of
all of us. This difference between
making cost and selling cost reaches
its peak in the case OF certain luxu-
rfes A certain eye-wash is reliably
said TO cost the manufacturer one dol
lor a gallon and to sell. in very small
bottles, at SIPS a gallon. A certain
cream, which is supposed to beautify
the complexion, costs the manufac-
.turer II cents a pound. and sells to
you at your drug store at so cents for
a three-ounce jar. You can figure the
difference for yourself.
Carbon tetra chloride Is a chenic-
used in fre-extinguishers of the cheap
err sort, which. incidentally. are OF
little value in fighting fires. Under a
patent name, mixed with another
chemical of no more value than 1t has,
this substance is sold for several times