"I can explain what I mean by showing you this letter," said Mr.
Shively. "Here is a line of goods I proposed to handle, and wrote the
manufacturer for prices. He has advertised them largely, but has not
worked up a very large sale as yet, though he has succeeded in making
them pretty well known. He writes me he will discount 35 and 5 per
cent., and adds: 'Please do not quote or sell at better than 30 and
5.' What does he take me for? The list is $12; 35 and 5 off brings the
net price to $7.41, and if I sold at 30 and 5 off, I get $7.98, or 6
per cent. on the investment, and I pay freight out of that! But this
manufacturer thinks I am liable to cut under $7.98, so kindly cautions
me against doing it. He must have a mighty queer idea of a merchant's
profits."

"What would you do if you were in the manufacturer's place, to begin
with?" I asked.

"First decide on a fair retail price. Every article must first be
judged on this basis. It is not 'What will the jobber pay for this?'
that decides the cost of goods, but 'What will this retail at?' Having
decided this, then settle on a discount from this price that will pay
the retailer a fair profit, and in quoting prices to the retail trade
stick pretty close to this. Then the jobber should have a margin of 15
per cent. at least, and yet be able to sell retailers at my price."

"But suppose the goods will not allow all this."

"They must allow it if they are to be handled by the trade in a
regular way, and they will always allow it if proportioned aright; but
what I complain of is that so many manufacturers are unable to
comprehend the jobber's position. Here is a sheep-shear that is