EXPENSE FACTORS IN CITY DISTRIBUTION OF PERISHABLES 31 
Table 18. — Relation of margins to total annual retail sale, New York Metropolitan 
area, February, 1923-May, 1924 
Commodity 
Total 
1923 retail 
value 
Percent- 
age 
margin 
Commodity 
Total 
1923 retail 
value 
Percent- 
age 
margin 
• 
Thousands 
of dollars 
23, 111 
22, 419 
21,040 
17, 936 
15,855 
9,288 
9,037 
Per cent 
37 
41 
46 
49 
38 
45 
53 
Eastern lettuce 
Thousands 
of dollars 
8,944 
7,469 
4,601 
4,404 
4,211 
2,373 
1,290 
Per cent 
51 
Cantaloupes 
46 
Boxed apples _. 
Sweet potatoes . 
44 
52 
Southern potatoes - - 
Southern cabbage 
48 
58 
Yellow onions -. .. .- . 
White onions ._ ... 
63 
To illustrate the general relationship, let special consideration be given to 
three of the articles whose total values differ widely — northern cabbage, barreled 
apples, California oranges. Whereas the items in the total retail value seiies 
are in ascending order, the items in the percentage margin series are in descending 
order, thus: 
Total 
1923 retail 
value 
Margin 
(per cent) 
Northern cabbage 
Barreled apples... 
California oranges 
$2, 370, 000 
17, 940, 000 
22, 420, 000 
The question arises: Do not the differences in total retail value explain ade- 
quately the differences in percentage margins? Is not the lower margin on 
barreled apples, in comparison with that of northern cabbage, due simply to 
the fact that the metropolitan area as a whole spends more money per year for 
apples than it does for cabbage? Such a supposition might arise from the view 
that merchants could handle articles which yield their principal income at less 
expense per dollar's worth of goods than they could distribute commodities 
which bring a minor return. 
The meaning of the inverse association between total values and percentage 
margins is made clear by a little mathematical analysis. Let the total annual 
retail value of a commodity be indicated by R. and its total annual wholesale 
value be represented by W. The difference between R and W will then repre- 
sent the total annual expense of distributing the given commodity in the metro- 
politan area. The ratio of this total distribution expense to the total retail 
R-W 
value, — ^— 2 will then indicate the percentage margin for the given commodity. 
The statement that margins varv inversely with total retail values is expressed 
R-W 1 
in mathematical terms by the formula — ^— varies as-^r* Now in the series, the 
R-W 
R 
R 
percentage margin -~ — may be diminished concurrently with an increase in the 
total retail value R, by any one of three conditions affecting the relation between 
R and W, namely: (1) if R-W remains constant, (2) if R-W declines, (3) if R-W 
advances less rapidly than R increases. The last one of these conditions really 
embraces all three, for with constancy in R-W or with a decline in R-W, the 
total retail value R shows greater increase than that of total distribution expense 
R-W. The statement that the percentage margin varies inversely with the 
total retail value of an article therefore means merely that within the commodity 
series an increase in total retail value is accompanied by a proportionally smaller 
increase in total distribution expense. A satisfactory explanation of this pecu- 
liar relationship is needed to interpret the general inverse association between 
margins and total retail values. 
