fifty per cent is a proper and suitable rate of profit in retail transactions: understand, not fifty per cent on the whole capital, but an advance of fifty per cent on the wholesale prices; from which have to be defrayed bad debts, shop rent, the pay of clerks, shopmen, and agents of all descriptions, in short all the expenses of the retail business. If this custom were universal, and strictly adhered to, competition indeed would still operate, but the consumer would not derive any benefit from it, at least as to price; the way in which it would diminish the advantages of those engaged in the retail trade, would be by a greater subdivision of the business. In some parts of the Continent the standard is as high as a hundred per cent. The increase of competition however, in England at least, is rapidly tending to break down customs of this description. In the majority of trades (at least in the great emporia of trade), there are now numerous dealers whose motto is, "small gains and frequent"—a great business at low prices, rather than high prices and few transactions; and by turning over their capital more rapidly, and adding to it by borrowed capital when needed, the dealers often obtain individually higher profits; though they necessarily lower the profits of those among their competitors, who do not adopt the same principle. Nevertheless, competition, as remarked[1] in a previous chapter, has, as yet, but a limited dominion over retail prices; and consequently the share of the whole produce of land and labour which is absorbed in the remuneration of mere distributors, continues exorbitant; and there is no function in the economy of society which supports a number of persons so disproportioned to the amount of work to be performed.
§ 5.The preceding remarks have, I hope, sufficiently elucidated what is meant by the common phrase, "the ordinary rate of profit;" and the sense in which, and the limitations under which, this ordinary rate has a real existence.
- ↑ Vide supra, book ii. ch. iv. § 3.
