9. Who is a middlemaid—Middlemen have been the chief target for criticism when fault' is found with the present distributing system. Some of this fault finding is justified; much of it, unjustified. When there is unjustified abuse of the middleman in gen eral terms, it is often founded on a misunderstand ing of what the word middleman means. Too often the term is applied exclusively to one small class of dealers; whereas, when used without qualification, it should include everyone who stands between the prime producer and the consumer, and who exacts a profit for the risk he runs, in addition to being paid for the cost of his services.
Suppose that A, a manufacturer, employs a sales man, 13, to sell goods to the consumer. C. B is paid for the cost of his services; he is not a middleman, be cause there is no element of profit in the compen sation he receives. He is an employe and not an in dependent business man. Suppose, however, that A employs no salesmen. On the contrary, he utilizes the services of D, an independent dealer, who agrees to stand between A and C in the distribution of 1-1's goods. The actual time that D puts in must be paid for, but A must also pay him enough to permit him to take a profit to compensate him for the risk he runs in investing his capital in the business of' dis tributing A's goods. The element of profit-taking makes D a middleman. The total payment to him, including cost of actual service and profit, may be less than the salary or commission paid to the regu larly employed salesman. But small compensation does not make him less a middleman if he has assumed a risk and taken a profit.
10. Greatest of the description of the middleman suggests the wide application of the word. Probably most people, when they think of the middleman, have in mind the jobber or wholesaler. The jobber, however, comprises only a small class. Equally unimportant, from the standpoint of total business, are brokers, commission men and other in termediaries of the same type. The greatest of all middlemen is the retailer. The total volume of his business probably exceeds the total business of all other kinds of middlemen combined; he is the out standing factor in our indirect distributing system; and his services, his functions, his characteristics must be considered whenever there is agitation for the elim ination of middlemen as a class.
There is much loose talk about the eliminating of the middleman. It ari§es in part, as has already been
said, from an improperly restricted use of the term, and in part, also, from a failure to understand what the middleman really does. We are not concerned at present with the specific functions of the several types of middlemen. The definite duties of retail ers and of jobbers are to be considered in later chap ters. Just now our concern is with all middlemen— with that inclusive group of many different kinds of distributors whom we must have in mind when we speak in general terms of the middleman.
11. 3Iiddlemen and the manufacturen—Middle men, as a class, are the mainstays of the market or ganization in the adjustment of supply to demand. Middlemen provide a clearing house for the facts of supply and demand. The producer is given a knowl edge of demand thru the agency of the people who stand between him and the final market. The manu facturer in one part of the world, for instance, learns of the needs, desires and demands of people in other parts of nthe world by means of the chain of middle men standing between him and them. In the market for manufactured goods there are many consumers for each producer, and the market must be organized in such a way as to provide for the breaking up of the large production of the manufacturer into many small units which are to go to a large number of final buyers. Many manufacturers cannot feel the pulse of the final market at first hand, simply because of the very large number of people that make up the market. Middlemen do this for them.
12. Middlemen and the consumen—The middle man does not help the manufacturer alone. He is of equal aid to the consumer. One important function of a clearing house for the facts of supply and de mand is to carry to consumers a knowledge of supply. Suppose that there are no middlemen, and that you are a consumer wishing to buy salt. Where are you to buy it? Where is it produced? What manufac turer sells it? You might learn all this about salt after careful investigation, but would you have the time to make the same inquiry about all the other myr iad things that you eat, wear and use? The middle man saves you this trouble. He brings together, in the retail store, most of the things that you need; in other words, he makes it unnecessary for you to ob tain for yourself a knowledge of first-hand sources of supply.