HAND-TO-MOUTH BUYING. This American phrase describes a method, involving a notable change in the economic structure of American business, which is the purchase by jobber, retailer and consumer of only such small supplies of goods as are immediately saleable or appropriate for the moment. It was a radical departure from the long-prevailing custom of the jobber and retailer ordering and keeping in stock a large assortment of merchandise. Likewise, it was an important change in the buying habits of many American people.
Hand-to-mouth buying began on a large scale in 1921, but some of its contributing causes were produced by the outbreak of the World War in 1914. Almost every American industry was pressed to fill orders from Europe. When the United States entered the war in 1917, transportation of munitions and other war supplies became a prime object. Manufacturing production had been greatly increased, but the railroads were not equipped to handle the immense volume of goods for both war needs and private consumption. Jobbers and retailers were unable to secure promptly goods ordered from the manufacturers. With the war's end in 1918, there was a movement to meet the public demand for goods by overstocking. In the summer of 1920 a widespread industrial depression set in; the public stopped buying; and dealers were left with overloaded and stale stocks of depreciated value. From the fear of again over-stocking, jobbers and retailers adopted the hand-to-mouth buying policy.
So rapidly did public taste for different styles in many articles change that manufacturers faced a problem of production, and jobbers and retailers felt that they could not afford to risk carry ing a large quantity of goods. Great changes in consumer de mand had taken place, and these in turn seriously affected mass production of goods. General automobile ownership removed suburban and rural isolation. Fashion magazines penetrated into the remotest places, and cinema pictures everywhere vividly pre sented the latest modes. The result was a general popular awaken ing to an appreciation of "smart" garb and up-to-date objects, whether for house decoration, for home furnishings, or for other purposes. Consumer demand became more selective and indi vidualistic ; manufacturers found that they could no longer impose old stocks unsaleable in cities upon small towns and rural in habitants. In its condition of post-war prosperity, the American public demanded constant changes in styles and was both able and willing to pay for them. No prudent merchant was disposed to buy more of an article than he thought could be sold within six to eight weeks. The great increase in commercial rents in the various American cities caused storekeepers to take smaller shops. From 1918 to 1928 these rent increases approximated 300%. The resulting curtailment of store space supplied another reason for hand-to-mouth buying, and the development of motor truck transportation made it more feasible to rush small orders to their destination. The net result was that both experts in merchan dising problems and the merchants themselves generally agreed that the soundest policy was to buy only to meet immediate needs. This policy was, therefore, almost universally adopted, and per sisted until late when, at the outbreak of the European war, prices began to rise sharply. This price rise caused some mer chants as well as manufacturers to buy heavily in anticipation of further price increases.