Production v. Distribution

In 1919 the late great Storeman of Boston, Edward Albert Filene (William Filene's Sons Co.) set up the Twentieth Century Fund, for "the improvement of economic, industrial, civic and educational conditions." Three years ago that well-heeled foundation slipped the leashes of two able fact-finders, Paul W. Stewart and J. Frederick Dewhurst, told them to make some sense out of the U. S.'s distribution machinery. Result (published last week): Does Distribution Cost Too Much, a survey which, but for war, might last week have been the biggest news to U. S. business. Its prime conclusions:

>Production has become definitely the smaller end of U. S. business. Of the average consumer's dollar, 41-c- goes for goods, 59-c- for advertising, transportation, an involved system of middlemen, dealers, retailers.

>Between 1870 and 1930, efficiency (volume of goods per worker) in production trebled but efficiency in distribution sat still, and a quarter of the country's workers were shifted from production to distribution. While U. S. businessmen goggled at the cost-saving possibilities of automatic machinery and scientific mass production, they let distribution grow into a vast, unscientific mushroom. Pennies snipped from production cost climbed back onto the cost of getting goods to the consumer.

>Great though their take is, because of inefficiency the industries of distribution as a whole are no gold mine for those engaged in them. ". . . The elimination of the net profits of distribution all along the line from primary producer to consumer would result in an average saving of no more than three cents out of every dollar paid by consumers for finished goods." The research done, ten economic bigwigs were asked to confer, formulate a "program of action." They nibbled like scared mice at the big cheese of distribution, recommended: strict accuracy in labeling and advertising, consumer education, commodity research, careful cost analysis of distribution industries. To meet increasingly costly conveniences offered by retailers (credit, free delivery, Smith girls behind the counter, swank salesrooms, return privileges), they suggested "differential pricing," by which an article would have several prices, according to the number of these conveniences a consumer wanted to pay for. Judged undesirable: monopoly, legislative attacks on chain stores, and State legislation discriminating against out-of-State business.

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