The express company, however, does not attempt to carry a ten pound package from New York to Seattle for fifty cents. Such long and profitless hauls they leave for Uncle Sam. Yet, even so, with all the cream of the parcel business continually and inevitably going to the express companies, the Post Office Department according to its reports makes a profit in its “parcels post” business.
Of course were the post office rate from New York to Philadelphia a real parcels post rate, that is, for example, 20 cents for ten pounds instead of $1.60, there would be 1,000 pounds of merchandise so sent where there is one sent today. People will use a parcels post when it becomes cheap enough to be an economic possibility, and they will use it enormously, as experience elsewhere has abundantly and conclusively proved. Until then they will use the fourth class postal rate only for the occasional cross continental parcel on which the express rate soars out of all reach, or for the small parcel under a pound in weight on which the fourth class rate is less than the express companies’ minimum charge.
The four vital arguments (the four great express companies) against a parcels post, once so succinctly enumerated by Mr. Wanamaker, and the other hoary arguments sampled above, have, however, of late years been bolstered by another—the welfare of the “small country retailer”; and round the great fear of a vague but very horrible something called “trade centralization” the battle for parcels post is at present being waged.
It has been taken for granted that the small country retailer will be put out of business by the parcels post with its low delivery charges—yet there are stores in Yonkers, Plainfield, etc., in spite of the fact that the New York department stores deliver in these places free.
Let us examine another aspect of this death-of-the-small-retailer-fattening-of-the-mail-order-trust-bogey a minute, and see whether a parcels post means really a more centralized basis of distribution, or a less.
Speaking very roughly, there are in the world two great tides of merchandise traffic: one of raw materials, of which food products is the most important, from the farmer to the urban consumer; one of manufactured products—to wear, to use, or to eat (as refined sugar or prepared breakfast food)—from the urban maker to the farmer consumer.
Surprising as it may seem the parcels post argument has dealt almost entirely with the latter tide: of the former tide, even more important, as I think I can show, very little has been said.
Let us look for a moment into our existing high cost of transportation, and therefore, decentralized distribution of farm products.
In New York the farmer sells his milk for—these figures are quoted very roughly and without elaboration but they will give my point—2 cents a quart. He sells it, usually, to one of two or three—there is considerable evidence that they all act in agreement as one—gigantic milk companies (of which Borden’s is the largest) which bring it into the city and distribute it. The ultimate consumer—again I give a rough figure—pays 10 cents a quart. The other 8 cents is the “distributing cost”; and in each case it goes, mind you, to two great corporations, a milk company and an express (or a rail-road) company. Is this that decentralized distribution that the defenders of the express companies in and before our Committee have eulogized.
Take almost any other farm product, strawberries, for example. The farmer, who grows them, gets 3 cents a basket. Then begins a long line of tolls: the express company, 3 cents; the commission merchant, 2 cents (he claims, and often with reason, that his “spoilage” is high); the jobber 1 cent; the small retailer—delicatessen store, corner grocery or street cart vendor—3 cents (it “costs 25 per cent. to do business” he says, and it does too). The ultimate consumer pays 12 cents a basket, sometimes more, sometimes, when the market is glutted, a little less. Here is 9 cents of “distributive costs” of which but 3 went to our friend, the “small retailer.” The rest went to more or less centralized distributing agencies. Now suppose on the other hand that the farmer could send his products direct to his list of regular customers in the city. It would be perfectly feasible with a parcels post. Strawberries, which the farmer would get 6 cents a basket for (double what he gets now) could be delivered at your breakfast table the next morning after picking instead of two or three days old in the triple transit of commission merchant and his storage place, jobber and his trans-shipment, retailer and his store, and finally to you. And for this infinitely better article you would pay only 8 cents (2 cents for the parcels post) instead of the former 12.