514 ■ IOWA DEPARTMENT OF AGRICULTURE 



echoes, while a patient public waited in vain for results. We knew from 

 the beginning that our laws as they stand at present are inadequate 

 to bring about any great relief through legal measures, and we deter- 

 mined that this investigation should be more in the nature of an 

 attempt to obtain a fair knowledge of the underlying causes of the 

 present high level of prices and to make some recommendations for the 

 alleviation of the evil rather than to defeat the very purpose for which 

 the investigation was started by the recommendation of unsound, un- 

 economic laws. For this reason an attempt was made to obtain a clear 

 understanding of the problems confronting not only the consumer, but 

 the producer and distributor as well. 



Realizing that the merchant's selling prices depended not alone upon 

 the price he had to pay for his merchandise, but upon certain other 

 factors entering into their scale as well, we attempted to make as good 

 an estimate of these factors as our limited resources and the nature of the 

 work would permit. Chief of these factors in importance are the cost 

 of doing business and the "turnover," the latter being, in reality, a mere 

 subdivision of the former, but treated during our investigation as a 

 separate factor for a special purpose which will be apparent later. But 

 whether taken separately or as one factor, their part in the consumer's 

 buying cost is, of course, highly important. 



The consumer who sees an article priced at a certain sum at one store 

 and then discovers that the same article can be obtained at a con- 

 siderably lower price at another store, is apt to jump to the conclusion 

 that the first merchant is profiteering, unless he or she stops to con- 

 sider the difference in the cost of doing business between the two. It is, 

 of course, easy to see that the merchant wlio conducts an elaborate 

 establishment, gives elaborate selling and delivery sei'vice, and does 

 his business on a credit basis must, of necessity, obtain more for his 

 goods than the merchant whose establishment is simply appointed, who 

 does business on a cash basis and who makes no deliveries — who, in 

 other words, operates on a "cash and carry" basis. 



That there is a great difference in the cost of doing business, may 

 be seen from the following brief summary of an investigation conducted in 

 one Iowa city. 



Figures from thirty merchants, (grocers and butchers), doing an 

 aggregate business of $589,448 — an average of $19,981.60 were compiled. 

 The average cost of doing business was 18.26 per cent the lowest 6.82 per 

 cent, and the highest 35.9 per cent. Obviously, if the merchant whose 

 "cost" was the lowest and the one whose "cost" was highest were 

 handling the same kind and quality of goods, the patrons of the second 

 merchant were paying extra for something, this "something" in this, as 

 in most similar cases, being elaborate service. 



There is a place for elaborately appointed stores and expensive service 

 in our economic life or they would cease to exist. There is no reason 

 why these shops should not be patronized If the consumer is willing to 

 pay the price and feels that he is justified in so doing. The point is this: 

 — extravagance is a relative matter; what may be extravagance for one 

 man may not be for anoth^er. Obviously, the purchase of a $5,000 

 automobile would not be a source of serious inconvenience to a man with 



