Imágenes de páginas
PDF
EPUB

all will be running at a loss; and such competition among strong rivals often produces at the end shoddy goods, reckless financiering, and speculative methods in business which are a menace to business prosperity. Competition of this nature, resulting in a general depression of business, or in the bankruptcy of a large portion of those engaged in the industry, with the consequent losses to their creditors, is not immediately at least an economic gain to society, although prices may be low. It is rather on the whole an industrial loss, although one must not forget that as yet it is in these struggles that captains of industry pass their cadetship. It is in this class of industries, in which the amount of fixed capital in the plants must of necessity be large, and the competition of necessity fierce, and generally turning upon price, that combination is not merely more likely to be found, but is probably more clearly and easily justified, than in the case of those industries whose successful management requires investment of but a comparatively small capital.

CHAPTER III

THE WASTES OF COMPETITION

YONTRARY to the popular opinion, competitive I In industries of the kind mentioned in the pre

prices are frequently, if not usually, high prices. ceding chapter in which competition turns almost solely upon price, the competitive price will naturally be low; but in the other cases in which the cost of selling becomes an important factor in determining the price, competitive prices are certain to be high as compared with the cost of manufacture. So, too, if there is much loss from production on a small scale, prices will be high as compared with what they might be if carried on in great establishments, although this added cost may or may not be a matter of a competitive waste. One ought not to lose sight of the distinctions between production on a great scale and production under monopoly, and between the wastes of competition and those of production on a small scale. Both wastes tend toward combination.

Of course it is not the intention to assert that competitive prices, even in these industries in which one may contrast competition and monopoly, are always as high as monopoly prices, although that might in many cases be true if one speaks of actual prices instead of using both expressions in a technical sense.

It is probable that ladies' hats, gentlemen's neckties or

fancy shirts and other articles in the choice of which fashion, personal tastes, and the skill of salesmen enter largely as factors, sell for higher prices under a competitive régime than would be possible if a monopoly—even a legal monopoly-were given to one establishment. As will be noted later, however, such industries cannot readily be monopolized, unless one wishes to speak of personal skill or taste as a kind of monopoly. Before discussing the special wastes of competition which often make competitive prices high, one should note that it is intended in this connection to compare the actual prices received in the market with the cost of manufacture, not with the cost of production and sale in the market.

The advantages of large scale production are generally conceded. Those of combination, especially if the tendency is strongly toward monopoly are often denied. It will add to the cleanness of presentation if we note in order some of the wastes of competition that are lessened or eliminated by combination and then note some of the benefits of large scale production that are, of course, common also to the combination. The fact that the evils of the combination are not discussed in this chapter does not mean that they are to be denied or ignored. They will be considered later.

1. Manufacturers frequently say that the chief difficulties to be overcome in business are those of securing a market rather than those of manufacturing. This ordinarily means that, in order to make sales in competition with their rivals, it is necessary to take much care and to go to great expense in order to bring their goods to the attention and the favor of their customers. If, through combination among different manufacturers, this competitive bidding of one against the other could be obviated, it is evident that a large part of this selling expense could be saved.

Wherever it is necessary for merchants to make selection of goods in order that they may suit the tastes and needs of their customers, it is desirable usually for them to see the goods before making purchases. Under those circumstances either the merchant himself must visit the manufacturer or jobber or else an agent of the manufacturer must visit the merchant. For many years it has been customary for travelling salesmen with samples of goods to visit merchants, in order to afford them this opportunity of seeing goods before purchasing, and of selecting those which are likely to suit the tastes of their customers. If one manufacturer of muslins or hats or drugs sends a travelling salesman to visit the retail dealers throughout a certain section of the country, rival manufacturers must in some similar way bring their goods to the personal attention of the merchants, or else sales will be lost. The result is that several salesmen from as many different houses travel over the same routes and show goods to the same merchants. If a combination among the manufacturers in the same line could be made, one salesman could show all of the goods of the combination to all of the different merchants substantially as well as the entire number could do before the combination was made. When the American Steel and Wire Company was formed, it was on this account found possible to dispense with the services of nearly two hundred salesmen. When one of the whiskey combinations was formed, about three hundred travelling salesmen were spared without the business being in any way neglected.

Moreover, when competing salesmen visit a merchant it is often true that the more plausible or skilful salesman succeeds in taking the order, although his goods may possibly be inferior to those of his rival. The best salesmen, therefore, are often thoroughly trained, experienced men who command high salaries. When, however, owing to the formation of a combination, the merchant has but one manufacturer from whom to buy, it is not necessary that he become a victim of eloquent persuasion. It is sufficient if he see the different lines of goods with prices attached, and take his choice. A much less skilful salesman, therefore, provided he be honest and diligent, can do the business thoroughly well. The manufacturer may now employ a salesman for two thousand dollars, whereas against competitors it might have been profitable to pay five thousand dollars and more for successful service. The stimulus which it is so necessary for travelling book agents or clerks in retail stores to furnish to their customers is much less needed in selling to a dealer. The amount of his purchase depends mainly upon the demands of his customers, and therefore often upon his own skill as a salesman.

Competition also increases the necessity of frequent visits. In some portions of the Northwest it was at one time customary for the wholesale druggists to send salesmen through the country every six weeks or two months to show goods and take orders for specialties, samples of which it seemed necessary to exhibit. Orders for standard goods were regularly sent to the

« AnteriorContinuar »