13. Aid in making prices.—Finally, as a result of his function of bringing to the producer a knowledge of demand and of bringing to the consumer a knowl edge of supply, the middleman is influential in helping to establish relatively uniform prices over compara tively large areas. A definite world value for wheat, for instance, is due solely to the ela.borate organization of the wheat market. It is of undoubted benefit, and the public profits in like manner from any organi zation that tends to establish standard prices for staple manufactured goods over wide sections of the country.
14. Four kinds of utilities.—We have said that the first great function of the middlemen who form the backbone of the market organization is to serve as a clearing house for the facts of supply and demand. Another great function is to create utilities. There are four kinds of utilities. Elenientary utility is il lustrated by the qualities in wheat which enable it to support life. Form utility is given to wheat when it is ground into flour in order to make it palatable. The fact that flour, possessing both elementary and form utility, is in the miller's warehouse in Minneap olis is of little interest to the man in New Orleans. If the flour is to have real utility for him, it must be brought to New Orleans. In other words, place util ity must be added to it. Even with the addition of place utility, however, the citizen of New Orleans may not be able to utilize it. If it is brought to his city in May and he needs it in July, it is of no use to him unless it is stored by someone so that it will be available to satisfy July needs. In other words, the flour, even possessing elementary, form and place utility, cannot be used unless it also possesses time utility—the quality of being available for use when it is needed. With elementary and form utility the mar ket organization has nothing to do, but with place and time utility it has very much to do. Middlemen pro duce place and time utility; they carry things from the place where they are produced to the place where they are needed and put them at the disposal of consum ers at the time when they are needed.
15. Middleman, as a is the fashion nowadays to decry present methods of marketing, to charge that middlemen are non-producers, and to proclaim a coming day of direct contact between all makers of goods and their ultimate consumers. The public often falsely ranks as producers only the manufacturers and those who furnish them with raw materials. The mere handler of goods, the trans
porter, the warehouseman, the dealer, is put on the defensive, and there are times when popular criticism of his activities conduces to a frame of mind in which he is not sure that the criticism is unjustified. It is well to inquire just who is a producer. The best defi , nition of a producer is "one who creates utility." The definition says nothing about the kind of utility cre ated; it certainly does not refer alone to the creation of elementary and form utility. If this is true, the men who grow the wheat and those who grind it into flour are not the only producers. If the creation of time and place utility is equally a characteristic of the producer, then we must also classify as producers those who transport the flour to the place where it is needed and those who hold it there until it is needed. A producer is one who creates any kind of utility.
The middleman in the great majority of cases is not a parasite; he is just as much a producer as the man who helps to produce raw materials or the man who changes their form. In his "Elements of Econom ics" Professor Richard T. Ely says: It has seemed to some, even among economists of an earlier time, that the farmer is more truly a producer than the manu facturer, and the manufacturer than the merchant ; but care ful thought discloses the fallacy of such a view. All indus trial classes alike produce one or more of the four sorts of utility, and they do so by changing the relations of things in time or space. The farmer changes the position of grains of corn by dropping them into the earth. Then Ile removes the weeds and throws earth about the rising stalks. Thus man's arts in changing the relations and positions of things, aided by Nature's materials and forces, result in more corn for human consumption. The manufacturer in the same way changes the position of pieces of matter, and, aided by nat ural forces within and without the object of production, he causes the matter to assume a form that fits it, or better fits it, for human needs. So, too, the merchant changes the places of things from where they are less useful to where they are more useful, or holds them in one place until a change of external circumstances gives them greater utility. He is producing utilities as truly as is the farmer or the manufacturer.