INDUSTRIAL DISTRIBUTION. The title Industrial Distribution, as here used, re fers to the agencies and policies used by manu facturers in the marketing of their goods. If a comprehensive discussion of modern market ing methods were contemplated it would be in order to define the functions of the various in stitutions which serve in common all branches of commercial activity and then to set forth the practices used for the distribution of agri cultural products, the methods used by manu facturers, and the organization and manage ment of wholesale and retail trade. This all refers to the merchandising of movable com modities and takes no account of the interest ing methods which have been devised for the sale of other goods, such as real estate, trans portation, securities, professional services, en tertainment, etc.
The Institutes of Trade.— In considering the manufacturer's problem specifically, it is worth while to begin with mention of the un derlying institutes of trade. The first of these is the accepted system of weights and measures. Based in part upon legal enactment, and in part upon custom, the commercial meas ure is the unit to which price is usually at tached. If it be in any degree vague, repre sentative trading is discouraged and the cum bersome methods of lot inspection and of dick ering and bargaining prevail. Modern trade is carried on with a system of weights and measures which is in part antiquated and in whole heterogeneous. The defects of the sys tem have long stimulated reformers to work for a comprehensive and logical plan, such as the metric system appears to present. The trading community. however, is wedded to cus torn and is mindful of the inconvenience of the transitional period, of the capital invested in scales, containers,. etc., and of the obso lescence which would overtake existing records if a change were made.
The System of Grades.— The second in stitute of trade is the system of grades, by which differences in quality are made definite and expressed. Without the foundation of legal enactment, which stabilizes our weights and measures, and with only so much public control as will prevent the grosser forms of fraud, the system of grades used in commerce is elastic. Old grades are continually being dropped and the names and definitions for gotten, while new grades with appropriate words or phases to designate them are intro duced as advances in the manufacturing art re quire. The terminology of commercial grad
ing is enormous: a book of large size is re quired to define the better-known kinds of tex tile fabrics. The legitimate terminology of grading is further overlaid by a vast variety of expressions used by traders either as a part of the gaine of trade puffery or as an en deavor to coin a trade name and get it intro duced into the language as an indispensable trade term. Practically all of our systems of grades took their general form in an earlier day when few qualities were offered, and those were decidedly distinct from each other in physical properties. The need for a finer gra dation of the quality scale has given rise to split grades or intermediate grades. In addi tion to these legitimate grades, the market has to cope with the skin grades of dishonest traders. Skin grades are qualities pitched so slightly below the recognized standard grades that while they may pass for what they are among traders and at an appropriate abate ment of the standard-grade price they are ex pected to deceive consumers and sell at full prices to the general public.
Prices.— The third institute of commerce, and the most important, is price. A price is the exchange value of a commodity expressed in terms of money. The common expression is that price marks the equilibrium of demand and supply. The factors which determine price are not simply the primary supply of producers and the ultimate demand of consumers, but all those speculative activities of traders who, in anticipation of the future increase or decrease of supply or demand, alternately hold back goods from the market or throw reserves upon it. Since the manufacturing industry is rea sonably stable in its productive capacity and the retail and wholesale industry likewise in its distributive capacity, and since the habits of consumers tend to remain reasonably con stant over short periods of time, if left un disturbed by outside conditions, we must look elsewhere for the factors of change which are responsible for price fluctuations. Two of the chief causes of these fluctuations are changes in the weather, which influence the production of raw materials, and derangements in the credit mechanism of industry. These factors of change the manufacturer should learn to watch as barometers predicting future market movements.