The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1924-12-20
BIRMINGHAM AGEHERALD SATURDAY, DECEMBER
Men And
Markets
BIZ p. F.. B.
The Yellow Taxi corporation has made

The Yellow Taxi corporation has made
discovery. 1t is not entirely new,
as Henry Ford came across it some
time ago. A taxi war has been on in
New York City for some months, and
finally the Yellow Cab interests, ope-
rating 1,750 cabs and representing the
largest single taxi interest, cut fares
SO 1-3 per cent. They did 1t to end the
rate war and in doing it they discov-
cred the principle. Under the new low
rates the daily income per cab increased
from SASS to SECS. The lower rate in
creased receipts by over so per cent. A
little more gasoline, oil, tire charge,
and depreciation takes care Of the added
volume and the Yellow Taxi corpora
than 1t did at 4Oc. AS we have sug-
gested, Henry Ford discovered this
basic merchandising principle some time
ago. He never figures the cost of a
product and then adds overhead and a
profit to get at the selling price. In
stead he goes into his market and esti
mates the price at which the public will
gladly buy one hundred thousand, five
hundred thousand, or a million Ford
cars. Then that is the price! The cost
to produce on the old volume makes
little or no difference to him. In fact.
practically every price that has ever
been set on Ford cars was lower than
the cost to make them at the time the
price was put into effect. Then 1t is
up to the production department to
manufacture them at profit. So
far they have always been able to do it
and it is upon this merchandising prin-
ciple that Henry Ford has built the
greatest manufacturing business in
America. And now, the Yellow Cab
tries the experiment of selling taxi serv-
ice for less than it costs to produce II,
only to find that 1t can be delivered
more profitably on the new basis than
the old. The whole thing looks revolu-
tionary and quite outrages our sense
of what seems reasonable in light of the
old merchandising methods which as
certained the cost Of the product, added
overhead and profit to get selling price,
and then put 1t up to the sales depart
ment to move as many goods as could
be made. The new plan of overcoming
sales resistance by setting a price that
people will be willing, even glad to
pay for the product or service, regard
less of paper" costs may outrage the
accountants high regard for sacred fig
ures, but 1t appears to work. If by
any chance you are having trouble in
selling goods in satisfactory volume, the
idea merits serious consideration.
A billion dollars Is set as our prob
able favorable balance of trade for the
year 1924. The department of commerce
submits figures for eleven months ex-
ports amounting to $4,146, 100000.
Against this we find imports Of $3,277,-
100000. The difference promises to be
just about an even billion dollars of
exports over imports. This compared
favorably with last years totals which
showed exports of $3,740, O00, 900 and i'm
ports of S3,503,000,OO0. We have in
creased exports and decreased imports
so that our socalled favorable balance
of trade should be about $50 per cent
greater than last year. This balance in
our favor will probably continue to
increase during Europe's financial re-
covery and industrial reorganization.
When Europe is again manufacturing
on regular basis and Is competing for
he worlds trade, however, the margin
may be expected to return to a more
even balance.
Where is the farmers dollar going?
There seems to be an air of mystery in
some quarters at least surrounding the
farmers increased purchasing power
and what has become of it. Some have
claimed that 1t is being spent for lux
uries others say it is paying old debts,
while the question is answered by one
man at least by contending that nothing
has become of the farmers dollar. He
still has it. The question merits con-
sideration, for If the farmer is squan-
dering his new found wealth basic in
dutries must not count on rural buy
ing for support. One of the officials
of mail order house comes forward
with expert and specific testimony. He
says that an analysis of orders be-
ing received from farmers shows that
such money as is being spent is going
for fences, stoves, building materials,
cream separators, gasoline engines and
similar essentials. The country banks
add their testimony to the fact that
farmers are liquidating their debts and
are paying up old bills. 1t looks as
though the "squander theory" had a
little actual support. The bulk of the
increase in purchasing power is still in
the hands of the farmer, and he may
be depended upon to spend it soundIy
for the things that will improve his
producing power and thereby increase
his permanent assets.