recommend the continued compilation of statistics in order to determine the incidence of these burdens as between country and town and the national economic relationship of roads to railway and waterway costs and services.

(C) POST.

38. The present high parcel post rates constitute a formidable hindrance to the most economical means of conveying many classes of farm produce to urban consumers. We are informed that these rates are in excess of those charged in other progressive countries and that they tend to deprive both producers and consumers of one of the easiest means of dispensing with intermediaries and deriving mutual benefit from the direct transit of such commodities as eggs, cheese, butter, cream, poultry, bacon and certain fruits and vegetables; they discourage that larger home production which will open the way to larger postal revenue and should, if possible, be reduced. We would also reiterate our recommendation that the Post Office should adequately test the cash-on-delivery system for parcels, taking care to make the booking fee no higher than that which is found to be adequate in other countries.

VI. THE WHOLESALE STAGE.

THE TENDENCY TOWARDS LARGE TRADING UNITS.

39. A question which merits general consideration is the tendency to form large business units for the handling, processing and, in some cases, conversion of agricultural produce in the pre-retail stages of distribution. We have noted this tendency as regards milk; there are instances in the wholesale trade in fruit and vegetables; it applies to the trade in both English and imported meat; while among millers there is evidence of a steady movement in the direction of concentrating business in the hands of large units rather than leaving it diffused among a considerable number of small concerns.

40. To the extent that it brings cheapness and efficiency into the system of distribution, the large-scale business is clearly a public advantage though there is always a point beyond which further growth may lead to a weakening of administrative control and a consequent inflation of overhead and other charges. Nevertheless, viewing the wholesale trade as a conduit through which produce passes from a large number of widely scattered producing units, to be dispersed again to a large number of retailing units, the opportunity which unification affords of increasing the grip of any individual business on the local distribution of supplies must not be overlooked. The position of the farmer as a seller, and of the retailer as a buyer, is bound to weaken in corresponding ratio as consolidation proceeds. It is

to be noted, however, that the farmer is in a weaker position than the retailer, since the wholesaler is not always able himself to engage in retail distribution, and it is often to his interest to foster the goodwill of retailers by allowing them an adequate margin of profit.

41. A further point of importance is that, in so far as the wholesaler expands his trading relations and undertakes the distribution of supplies over wider areas than he can with advantage serve, there is the danger that any savings attributable to unification will be dissipated in the uneconomic consignment or re-consignment of supplies, in the maintenance of costly selling agencies and in avoidable duplication and waste.

42. We appreciate the value of the services of wholesale distributors, in such matters as the complicated function of daily "balancing" supplies dumped in varying quantities on to the trade, the economic utilisation of surpluses, and the treatment of products passing through their hands. Our evidence indicates the superior efficiency of the large-scale business as the most effective means of ensuring, in normal circumstances, the minimum costs of services, whether of preparation or manufacture, of collection or delivery. These large scale businesses may develop until they control a substantial part of their particular trade. We have already noted, for example, the existence of a large amalgamation of capital in the wholesale milk trade of London; we have suggested that the community should be given adequate assurance that the costs and profits of such organisations are not unreasonably high, and that they should be required to make public, annually, by filing at Somerset House, particulars of all businesses under their control, together with a co-ordinated balance sheet, showing inter alia the proportions of capital represented by (a) goodwill, and other intangible assets, (b) fixed assets, and (c) floating assets, and the aggregate amount of their (d) liabilities, (e) reserves, and (f) profits. Similarly, we have recommended that, having regard to the fact that a large proportion of the cold storage in London and the provinces is owned by one organisation, proprietors of cold storage in this country should be called upon to furnish periodical returns of the total quantities of meat of various kinds on hand and that this information should be regularly published by the Government Department concerned. Public opinion is extremely sensitive in this matter. In our view, organisations engaged in the distribution of food are under an explicit obligation to dispel suspicion by fully and frankly publishing the general results of their trading. Nothing can contribute more to social unrest and instability than an apprehension, however groundless, that exploitation is rife in the distribution of food. The future is undoubtedly with the big unit, but its toleration will be conditional on an adequate appreciation of the requirements of the common weal.

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VII.-RETAIL DISTRIBUTION.

(A) THE HERITAGE OF CONTROL.

43. In considering the question of retail distribution we have been impressed by the fact that the State Control of prices and supplies during the war-period has profoundly disturbed the normal trading outlook of the great majority of retail distributors. In pre-war days, the value of the £1 in terms of the ordinary necessities of life was a known and well-understood factor. During the war-period, however, high wages and currency inflation generally caused values to change and old standards to disappear. The wage earners had more to spend than before, and the fixed points and pivots on which, by usage, their judgment had been based, ceased to serve any useful or reliable purpose. This loss of touch with values led to the gradual abandonment by consumers of the practice of discriminating in their purchases as between one retail establishment and another, and, in thus renouncing their customary watchfulness, they stultified competition and so forfeited their one effective safeguard against imposition. Possibly an even stronger reason for the abandonment of discrimination in shopping was the consumer's desire to obtain food supplies at any cost; regular purchase at one shop ensured priority of service and certainly of supplies. Subsequently the absence of competition was accentuated by the introduction of food-coupons which tied consumers to one particular distributor. In the same way the fixing of distributors' profit margins by the Ministry of Food, which was an essential feature of Control, destroyed in course of time the initiative of the private trader. The resulting lassitude did not vanish with the control that produced it, but showed a tendency to persist in the post-control period. Such energy as the retailer displayed was directed towards protective measures to maintain price margins rather than towards competition and the expansion of his individual business.

44. There are signs that consumers as a whole are re-acquiring a knowledge of relative values. Retail distributors, on the other hand, have not yet fully shaken off the effects of the control period and desire nothing better than to be left in undisturbed enjoyment of their profit margins and to restrict their turnover to an amount which will yield a comfortable return with the minimum of capital outlay and of risk, trouble and inconvenience to themselves. The profit-margins fixed by the Ministry of Food are still in evidence in many directions, and retailers who adhere to them quote State approval as a proof of their moderation. Our investigations show, however, that, on the whole, these margins were fixed at a very generous level, the leading consideration being amplitude, in order to make it possible for even the smallest or least efficient trader to live. Moreover, the

retailer stands between the wholesale market and the consumer and unless competition is keen and unfettered it is only after a lapse of time that the consumer becomes aware of changes in supply and price at the wholesale markets.

45. The position does not appear to be the same in the wholesale trade. Wholesalers depend far more than retailers on the frequency of stock turnover for their continued existence, and being in close touch with the primary markets where the first price changes occur, and where there is keen competition to sell, the prices they charge must immediately reflect any alterations in values caused by fluctuating supply and demand. Many sell on commission only and these rely entirely on the volume of business handled for their livelihood. Hence the wholesale trade does not seem to be indifferent to the importance of developing turnover, or to the fact that only by the constant flow of products can distribution be effected at the smallest possible cost.

46. The fact that consumers, by force of circumstances, are regaining their pre-war interest in retail prices, whereas retailers have not yet wholly moved out of the atmosphere of control, is largely responsible for the present uneasiness among consumers with regard to food prices generally. It is true that sound marketing by the consumer will hasten the return to normal trading conditions-and this is a direction in which the consumer can undoubtedly help himself-but a new factor to be faced is the consolidation of distributors which took place during control, and now tends to encourage mutual price agreements and other understandings, which, if pushed too far, must defeat the efforts of discriminating purchasers.

47. Retailers as a class work hard and serve the public well. They may be only vaguely, if at all, conscious of the residuary and benumbing influence of Control to which we have referred. That it exists there is, in our view, little doubt. That it will in course of time disappear is equally beyond question. Its disappearance can be accelerated only by steady and unremitting pressure on the part of producers and consumers.

(B) UNDER-SIZED RETAIL UNITS AND THEIR EFFECT ON

COSTS.

48. A striking feature of the distributive system is the large number of small establishments engaged in the retailing of food. In the milk trade, as also in the retail distribution of fruit and vegetables, there is a wide range of enterprises from the large multiple-shop concern down to the itinerant vendor. In the baking trade there are many bakers, even in the large cities, who handle less than 10 sacks of flour a week, while the number of meat-traders who do no butchering, as such, but buy their meat in small quantities in the wholesale markets and dispose of it in very small retail shops is considerable. Primâ facie, the existence of a large number of small concerns should make

consumer.

for keen competition and afford a valuable protection to the There is little doubt, for example, that the itinerant vendor of milk, and the hawker of fruit and vegetables, are disturbing to the retailers in whose area they operate. But they are not to be found everywhere, and, in any event, the conservatism of the housewife is such that irregular and unestablished traders make little permanent headway among the main body of consumers. Moreover, the persistence among retailers generally of the habits and customs formed during Control is a more than counteracting influence. No doubt some small concerns grow as larger concerns decline, and there is always a certain steady rise and fall in the status of individuals in all classes of businesses. There remain, however, a large proportion of small establishments the excessive costs of which, in the long run, render them powerless to provide the real and effective competition capable of reducing margins. They are not an unmixed blessing to the consumer. Many of them are too small and inefficient to render the public the services desired, except on wide margins which, though not more than sufficient to enable these establishments to pay their way, prevent them from being a check on larger and more efficiently managed concerns. Normally they exist by pressing into service one or more of the retailer's own family. It is true that, where the proprietor possesses more than ordinary business acumen, and can acquire capital, these very small businesses may expand. In this way they act as a potential source of competition, but it is a mistake to suppose that in average circumstances they affect the operations or the margins of the larger retailers. By the term "larger retailers " we have in mind not so much the departmental stores, which undertake long-range delivery and other expensive services, as the retail establishments which perform the same services in the same localities as the small concerns and may be either large, privately-owned individual businesses or the branches of a combine or other centrally controlled organisation.

49. In this connection, we desire to record the fact that our contact with the various distributive trades has shown that surprisingly few of the smaller traders keep accounts in such a way as to show the relationship of the constituent elements in the costs of their respective undertakings. The feeble response to our questionnaires is not wholly to be accounted for by indifference or by reluctance on the part of retailers to divulge their financial position, but rather to a low average standard of education and business knowledge. We consider that training in business methods is needed among retail food distributors generally. It would be a step in the right direction if young men who enter retail businesses were encouraged to take up the study of bookkeeping, shop management and the principles of retail merchandising. With an improved understanding of the economics of their trade which such instruction would provide, retailers should find it possible to reduce the costs of their trading operations.