WASTE IN DISTRIBUTION AND IN MANUFACTURES 7 I
an excess of producing-power, after exhibiting itself in a
comparatively trifling glut of actual manufactured goods,
shows its “ waste ” in the form of “ unemployed " labour
and capital, which operate in some measure as a check
upon further application of labour and capital. In the
latter, no such natural check is provided. Small quantities
of capital, unable to enter manufacture with any
reasonable prospect of success, may embark in distribution,
especially in retail trade, with some hope of attracting to
their businesses a fair proportion of the trade of others.
It is not easy for a new business to succeed even in
retail trade, but it is less difficult than in manufacture.
The same amount of business may thus come to be
divided among a larger number of persons. It may even
supply a livelihood to all, on the single condition that the
margin of profit in each sale is larger; which means, in a
period of falling wholesale prices, that retail prices fall more
slowly and more slightly. It can scarcely be doubted that this
is a true description of the actual phenomena exhibited
in distributive trade. The assumption commonly made
by statesmen, and even by economists, that the consumer
gains the advantage of the full decline of wholesale
prices, and that such decline is therefore a matter of
comparative indifference, is unwarranted. The cautious
opinion expressed by J. S. Mill has been closely borne
out by the experience of the last twenty years. “Retail
price, the price paid by the actual consumer, seems to
feel very slowly and imperfectly the effects of competition :
and where competition does exist, it often, instead of
lowering prices, merely divides the higher prices among
a larger number of dealers.” *
* “ Principles of Political Economy,” vol. ii„ ch. iv. § 3.
