Specialization among individuals is not the chief cause of the rise of the middlemen. Middlemen have become increasingly necessary with the development of community specialization. Pittsburgh makes iron and steel proaucts; Danbury makes hats; Troy makes collars and shirts; Gloversville,makes gloves ; Glens Falls makes paper bags and boxes; the Dakotas grow wheat; California and Florida grow fruit; the South grows cotton; Idaho and Washington grow apples ; and the list might be continued indefinitely. It is this community specialization that is most largely re sponsible for indirect exchange. One community can not exchange its specialized product directly for the specialized products of almost countless other com munities. Such a situation is inconceivable; no ma chinery has ever been devised to realize it. Some clearing-house arrangement is necessary to market the products of one community and to bring to it the products of others.
5. Large-scale production.—As a result partly of the discovery and refinement of machine power, large scale production characterizes present industry; this, in turn, has been an important factor in necessi tating the indirect exchange of manufactured prod ucts. A soap manufacturer began business by purchasing his raw material at the back-doors of the town, and then delivering his finished product to in dividual buyers in a wheelbarrow. As his business (Trew in size he did not have time to sell his increas e, ing product in this way, and the employment of help ers to make individual five-cent sales of soap would have bankrupted him. He was forced to use the es tablished middleman—the retail stores—and later to ask the aid also of jobbers. It is inconceivable that twenty million dollars' worth of soap could be sold yearly in direct sales to consumers. Large-scale pro duction ordinarily demands the middleman.
6. Overlapping of the periods.—It is not to be un derstood that the characteristics of the third com mercial period are universal. Certainly, complete specialization is not universal, and just as certainly all the goods of the world are not exchanged in directly. Yet probably ninety per cent of them are so exchanged. Regardless of any tendency to elimi nate unnecessary factors in marketing, and regardless of many striking present-day instances of successful direct exchange, the present system is characterized by relatively complete specialization and by the ex change of goods by indirect means.
7. Economic basis of modern marketing.—This brief historical survey shows that marketing proced ure and the relations of trade factors are not things that can be overturned in a night or by a mere legis lative decree. They are founded deep in the indus
trial needs of the times. The middleman is the out standing figure in modern marketing, not because he has consciously set out to make a place for himself, nor because consumers have blindly permitted him to come between them and the manufacturers of the things they buy. He has been forced into existence, on the one hand, by the necessities of specialized and large-scale industry, and, on the other hand, by the necessities of consumers, equally specialized in their activities and constantly demanding more and more in the way of service which the distant manufacturer must usual13,- rely upon the middlemen to give. If middlemen as a class are to be abolished, it can be done only by abolishing the conditions that brought them into existence.
8. Selling problems versus manufacturing prob lems.—In the first two periods of industry, selling problems gave mankind little concern. In the first period they did not exist and in the second they were relatively simple. The problems of getting goods from the factory to consumers grew out of indirect ex change and the industrial conditions on which indirect exchange is founded. Problems of competition, to be sure, would be present even without indirect exchange. At least coordinate with the problems of competition in any business, however, and often overshadowing them, are those which arise from the relations of the many factors in the chain of distribution to be consid ered in any selling scheme.
A generation ago manufacturing was the hardest problem in business. Today selling often takes this place. Science and standardization have gone so far that almost any manufacturing riddle may be unrav eled when brains and money are concentrated on it. This is because there are two factors in manufactur ing—the machine factor and the human factor—and the former can be almost absolutely controlled. In marketing there is no machine factor. There is only the human element, and no one has yet devised a workable plan to harness human nature and make it act in definitely predetermined ways. It is said that ninety-five per cent of all business problems are sell ing problems. Whether this is true or not, no one will deny that selling problems are enormous; and it is certainly true that their most complicated phase is the relation of trade factors arising out of the char acteristic indirect exchange of modern industry.