148 MARKETING AND THE MIDDLEMAN 



bought from farmers, but which never reach consumers. The loss, 

 of course, is added to the price of the goods as a protection to the 

 dealer. The middleman " hedges" or insures himself against loss 

 by buying on a sufficiently wide margin to give him protection. 

 Otherwise he fails in business. Mr. Adams also emphasizes the 

 point that the number of middlemen concerned is not the ruling 

 factor, but that there are four economic reasons for the present 

 big spread in price, namely: (1) The perishability of the goods; 

 (2) The great distance between the producer and consumer 

 frequently a thousand miles or more; (3) These goods are produced 

 by small-scale units the individual farm, and are consumed by 

 small scale units the individual family; (4) The high expense of 

 caring for these perishable goods. Standard grading and standard 

 packing, whether done by the progressive individual farmer, or 

 by a farmer's cooperative association (like the California Fruit 

 Growers Exchange Local Orange Packing Houses) is the first step 

 towards reducing these spreads in prices. Further remedies sug- 

 gest themselves such as (1) cold storage facilities for each com- 

 munity producing perishables for market ; (2) facilities for canning, 

 preserving, manufacturing or otherwise processing these goods 

 near the point of production, putting in the market only the high 

 grade produce. 



Services of the Middleman. The middleman's service as a 

 risk-taker has already been mentioned. By careful study and long 

 practice he becomes better able to forecast and hence discount the 

 economic risk. Time was, to be sure, when there were no middle- 

 men. Then, by barter and by the great annual fairs and markets, 

 producers and consumers enjoyed " direct dealing." But gradually 

 the producers and consumers, of their own free will, gave up these 

 forms of " direct dealing." The middleman came in, to bring goods 

 from distant points to the place where the consumer wanted them 

 and to collect and store goods, in such quantity and of such quality, 

 as to supply them to the consumer at the right time, of the right 

 amount, of the right kind. 



In economic phraseology, the middleman produced "time" 

 and "place" utility, which are just as important as the production 

 of the raw material itself, and just as truly "productive." As one 

 writer so ably sums up the economics of the middleman system: 

 "One of the most noteworthy ideas that results from a study of 

 the present retailing system with all its complexities, is that it is 

 the product of an evolution extending back over a great many 

 years, and that during all the intervening time there has gone on 





