HF UC-NRLF Ifi 724 "THE TIE THAT BINDS" TWENTY- FIFTH ANNIVERSARY THE SPERRY & HUTCHINSON CO. \(114 FIFTH AVENUE NEW YORK < TABLE OF CONTENTS PAGE FOREWORD 5 OUR SILVER ANNIVERSARY 9 EXPLANATION 28 OUR SILVER ANNIVERSARY 29 SERVICE 37 ETHICS vs. PRACTICAL BUSINESS 41 THE BUYER'S MARKET 43 VOLUME vs. NET PROFITS 47 HIGH LEVEL OF PRICES 49 SELLING 52 CASH TRADE 54 PUBLIC OPINION 56 CO-OPERATIVE CO-OPERATION 62 THE REASONS WHY! 66 THE "S.&H." COMPANY'S DISCOUNT SERVICE 68 WHAT ARE THE FACTS? 71 How TO USE "S.&H." GREEN STAMPS 73 THE THINKING MERCHANT 77 GIVE THE PUBLIC A CHANCE 79 "AsK THE MAN WHO KNOWS" 82 FIGURES, FODDER AND FINANCE 84 REACHING THE WOMAN WHO BUYS 86 CHARACTER AND CREDIT. . 88 M194558 FOREWORD THE biggest little thing in the advertising world that has suffered much in the past both from prejudice and ignorance has been the Trading Stamp. The Sperry & Hutchinson Company has owned, developed and operated the Green Trading Stamp Service for a period of twenty -five years in the face of all of this opposition. As the promoter of a Discount System for Cash Trade, it has been my ambition to welcome all manner of investi- gations from Federal Trade Commissions, public bodies and individuals, with an idea of ascertaining just what our troubles were and with the further idea of informing those who had a prejudice or were ignorant of our propo- sition in order that they might become better acquainted with it. Of course I know as you must know that twenty- five years of doing business with merchants has brought us much experience and has taught us many things that no one could know or learn excepting from this experi- ence; and likewise it would naturally follow that the Trading Stamp idea had been studied and quite thor- oughly understood by those agencies in the business world that are supposed to stimulate sales and aid distribution. I believe all of this has happened, for I know that we have more satisfied merchants doing business with us, and the business is on a higher plane than it has ever been. I think it is fully understood to-day that the merchant who uses our Discount Service does not use it in place of anything else. I mean by that it does not supplant his advertising expense, his billboard display, his show win- dow dressing expense, his delivery service, or the many other things that he offers by way of inducement. Ours is separate and distinct; operates in a field all its own; and attaches itself to the community that trades at the merchant's store only by reason of his propaganda and his continual advertising of our Service as a feature of his F O.R E W O R D store. Those who have done this are the ones that are now using Stamps because they have obtained the results that justify a Stamp Service. The idea of the use of premiums for the promotion of trade is still strong in the minds of everyone in every country, everywhere. It is so natural, so reasonable, and so practical when worked out in the form of a Discount Stamp Service that the buyer not only lends himself au- tomatically to the saving thus offered him, or her, but it becomes a habit and thus do we promote not only prac- tically, but automatic savings, or thrift. Inasmuch as the trade that is promoted by the use of our Discount System is a cash trade, it cannot well be said that we are promoting excessive or useless buying on the part of the public; and since 1915 we have stopped the prostitution of the Stamp by using it too generously. A Stamp to-day is the token of a discount on a ten-cent cash purchase at a merchant's store, and, as such, it can- not very well be condemned as being either ethically or economically unsound. Nor is the sale of the Stamp to- day being so generously pushed as toTTave any of the ele- ments of a parasite. The "S.&H." Service is sold on long-time contracts to good merchants and at a standard price; and I maintain that it is far better for this System of Service to have the single management of a national organization such as ours than to be left in the hands of the individual merchant to handle as his own difficulties and local trade conditions might determine, and where he could not have the advantage of our experience. The public has a better understanding to-day of the value of the Stamp and the meaning of its Service, by reason of its being a national system for twenty -five years, and the merchant is and should be free from having to compete with other merchants in the same town giving individual stamps and having no control over the same or the crea- tion of a large stamp liability. The "S.&H." Company has progressed very much within the last five years in the sense that we are continu- ing to sell not only a premium stamp to those who prefer it and who get the best results from it, but we are like- wise selling a Stamp redeemable in cash or merchandise selected from the merchant's store. This has put the F O R E W O II D Stamp on a higher plane of real value to the consuming public and no doubt has had much to do in killing off the small competitor or fly-by-night individual who lived for a month or a year and then went out of business, reflect- ing very much upon the integrity of the Stamp itself as well as upon the merchants using them. The Sperry & Hutchinson Company early learned that the integrity of the Stamp was of the highest importance and it has never refused to redeem a filled book of Stamps and it never will. The Company has not only its capital and surplus account of $1,500,000, but has provided a very strong reserve for the redemption of all Stamps outstanding, ag- gregating $2,000,000. In other words, it has put the business upon a high plane of meeting many of the old objections and criticisms that were directed against it. It is following the lines of the insurance companies that establish reserves for all outstanding policies; so that should the "S.&H." Company at any time go out of bus- iness or undertake to liquidate its business, it has ample reserves to take care of its Stamp circulation. This is something that retards the organization of a new com- pany, and also gives The Sperry & Hutchinson Company a very prominent and leading position in the service field. We are an organization that sells service to the mer- chant, the same as the advertising agency or the news- paper, but, as I have said, we are not in the same field. When I say to our merchants that we can produce a record showing that 95 per cent, of the Stamps issued are redeemed and that we have distributed in our twenty- five years over $100,000,000 in value to the merchants' customers in the redemption of their Stamps, I am saying something that not only is a matter of record, but that gives the Trading Stamp business, as conducted by the "S.&H." Company, the rank of a service company equal to any other advertising system. In presenting this booklet to you, I make a plea only for fairness, honesty and respect for all that is good, know- ing, "This world is but a mirror. As you look upon it, so it appears to you." GEORGE B. CALDWELL, President, The Sperry & Hutchinson Co. The Late THOMAS A. SPERRY, Founder OUR SILVER ANNIVERSARY ON Tuesday afternoon, Octo- ber 18, 1921, at 3:30 in the afternoon, the Home Office employes of The Sperry & Hutchin- son Co. gathered at the President's request in his office to dedicate to the Founder of this business, the late Thomas A. Sperry, a very beautiful oil painting six feet high and three and a half feet wide by the well known artist, Raymond Perry, which is symbolical of our business. It represents the Mer- chant, the Customer and our Service in "Co-operation" through "the tie that binds" the "S.&H." Green Stamp. In the following words, President George B. Caldwell explained the purpose of the gathering: MR. GEO. B. CALDWELL: I have called you together here at this time, having two things in mind; first, that this is the 25th anni- versary year of the existence of this Company, and that therefore as a Silver Anniversary of 25 years of our business life and business career, it is worth our while to stop and to give some considera- tion to that fact and to what has been accomplished during the 25 years by this organization. The second purpose of this meeting I feel should be a proper recog- nition of the Founder of this Company, who, 25 years ago, started the Sperry & Hutchinson organization Mr. Thomas A. Sperry. We have invited the artist to be with us on this occasion and to say something symbolical of our business. He is here, and at the proper time will have his say. We have always found ourselves, since we started business 25 years ago, a part of the merchant's life; and the merchant's life is that of catering continuously to the public from which he gets his trade. The retail trade of the country, which we serve the best, and, in fact, altogether, is composed of department stores and their sub- ordinate stores; and if you analyze that trade, it is not new to say to you that 90% of it is the trade of women shoppers. While a picture of the earning power of the United States, insofar as families are concerned, is that the average family earns or has come into its possession each year for the pur- pose of defraying expenses a little less than $600. There are those, a few, who exceed that; there are many who do not, so that an average is about $600 per family. That money necessarily has to provide the necessities of life; and that money, because the man is the bread earner, is turned over to a custodian of the home the woman, and she has it to buy the necessities of life for herself, her husband and her family. The Trading Stamp, therefore, became popular with the woman who had the money and did the buying, and we are very grateful that it was so, because the human nature of the wife, and of the one who has to be thrifty and who really practices thrift, either from necessity or because she loves to, leads her to give greater considera- tion to a discount of any kind, to a gift or premium, wherever she trades; to a consideration even of OUR SILVER ANNIVERSARY deliveries, and all of those things which stores have learned to use in catering to the woman shopper. We are, therefore, largely in the hands of the women of this nation who are doing the shopping for their homes, and in that sense we have contributed our share to them and through them as home- builders. Mr. Sperry was not unmindful of that fact and, inas- much as we are so largely a woman's proposition, it is not surprising to you, I know, who are acquainted with the records of this Company and most of its people, to know that in this home office 70% of our payroll in the point of numbers are women; and in the field, where there are a thousand or twelve hundred other people engaged, and who we wish we could have here with us, but we cannot, about 50% are women. So you see in our make-up we are largely in the hands of the woman. We also have as one of our principal stockholders and one of our principal directors, a woman, the wife of Mr. Thomas A. Sperry, now the wife of Mr. Edward I. Goodrich. Mrs. Goodrich learned the lesson of the Trading Stamp because she knew, or because she was close to, her husband. She was a home builder herself. She and her husband went through the early vicissitudes of building homes and of getting a foothold in busi- ness. She learned all the lessons that Mr. T. A. Sperry learned while he lived their relationship was that beautiful that close that confidential. Since I have been here she has been my most helpful director and vice-president, and therefore your best friend and benefactor. She has very many ideas that are good; very many ideas that are practical; and, be- yond all, a fidelity to a trust the like of which very few women that I have ever known have possessed. I have asked Mrs. Goodrich to attend this meeting and, in her own way, to say to you something about the early history of this business, so far as she cares to talk about it, as well as her own con- nection with it. I now introduce to you Mrs. Goodrich. MRS. KATE SPERRY GOODRICH: It has been well said that no people rise to a high degree of greatness who do not know or care about the achievements of their ancestors. So, too, it may be well said that business industry and enterprise is not based on an enduring founda- tion and will not attain greatness when the founder and the idea which brought it into being are ignored. The man who brought to light by incessant energy and perseverence any plan that has grown into gigantic proportions is inseparably connected with every stage of its development long years after its progenitor has ceased to be. An eminent statesman once said that we cannot even read of the discovery of this continent without feeling a personal interest in the event, and, I would like to add, a proprietary interest in the country. Mr. Caldwell has requested me to give a short history of The Sperry & Hutchinson Company from the time of its inception up to 1921 the twenty-fifth anni- versary. Many people speculate in their maturer years as to their earliest recollections, and not in- frequently some chance remark stimulates the mind so that it goes back further than they had believed possible. Somewhat in this way, Mr. George Klock was responsible for setting the date of the incep- 10 OUR SILVER A N N J V K R S A R Y tion-of this Company further hack than I had been able to recall. Mr. Klock recalls meeting Mr. Sperry for the first time in 1891, and distinctly remembers the numerous conversations in which the Trading Stamp idea was dis- cussed in its various angles; so that it can truthfully be said that the inception of this business in the mind of Mr. Thomas A. Sperry was as early as 1891, if not earlier. Of my own knowledge, Mr. Sperry, during the next five years, was engaged in a close study of merchandising conditions in con- nection with the Trading Stamp idea. He saw the growth of the numberless premium plans in use at that time; how inadequate they were, and yet how acceptable to the public. His work carried him over a large part of the United States, and he had a rare oppor- tunity to study the subject under varying conditions and from all angles. He had two important obstacles to surmount one the discovery of a simple, convenient method whereby merchants could co-operate and the public could achieve the greatest benefits with the least expenditure of energy. This he accomplished by the use of a system which is in vogue to this day. The other obstacle was the necessity for funds with which to operate; and the period between 1891 and 1896 found Mr. Sperry working hard, studying ten, twelve and sixteen hours a day, with more than sixty minutes in the hour, and economizing, in order that he might have the necessary money with which to begin his life work. The idea, in its origin, was pleas- ing and attractive to him; its foundation was the domestic circle; to furnish the home better the social unit upon which civilization rests in our troublesome world today. The comfort, the con- venience, the beauty, and the care of the household has been the mainspring of the home, and will continue to be as long as life endures. When, in 1896, he under- took the enterprise, he was willing to sacrifice every dollar that he had saved, and he took his courage in both hands, surrendered his position, which he had most ably filled, invited Mr. Hutch inson to join him, and began the work of The Sperry & Hutchinson Com- pany, with which his name is still and ever will be connected. He decided to carry as premiums every facility of the fireside things that would impart not only the spirit of economy, but the spirit of decoration and beautifying the home not through charity which subtracts from one's self-respect, but through thrift, a condition where charity is not implied. The idea to him seemed character- building as well as home-building. Mr. Sperry had spent a con- siderable part of his business career in the city of Bridgeport, Con- necticut. He knew the local conditions, and he had many friends, so he selected that city as the one most likely to give him best returns in the shortest possible time. Bridgeport was opened the latter part of 1896 25 years ago and Mr. Sperry 's faith in the premium business was immediately justified by the success that fol- lowed. The idea took root as if by magic and he very quickly discovered that it was not only the poorer people, whom it was his especial desire to serve, who recog- nized the benefits to be obtained from his plans, but that the more thrifty middle class and even the GEORGE B. CALDWELL, President OUR SILVER ANNIVERSARY wealthy responded in such measure that the quality of merchandise carried in the stores had to be changed immediately to meet the demands of the general public rather than that of a class. He was naturally highly gratified to find that apparently all classes of people approved his idea rather than one out of the many. The success in Bridgeport, which was the result of the efforts of two or three men, immediately justified the employment of more men and the opening of additional branches. To specify city by city and town by town would be to infringe upon the functions of a geography. It is sufficient to say that the plan spread like a prairie fire, ran up the Hudson River to Albany, over the trail of the Indian through the Mohwak Valley to Buffalo, and then across our prairies and vast deserts and over and through the mountains until we reached the great Pacific. Each city seemed to catch the color, and that color soon revealed many imitators and competitors. History discloses the fact that it is not easy for the true-hearted to do things. Philosophy, science, invention and speculation, in all of their respective ramifications, are beautiful, but they are ineffec- tual unless the household is com- fortable and conveniently embel- lished, as that adds joy and dignity to the home and existence. Our co-operative economic system of exchange has grown into national proportions by the work and the perseverance of our Sperry & Hutchinson Company. Like all reforms, new plans, and high- wrought purposes, its efforts have been resisted at times and by those who should best know the wonder- ful circuit of its wholesome in- fluence. However, there are some salient features in the history of the Company one is the jealousy with which some merchants looked upon the Trading Stamp plan. That any one of their number should select this plan and make a success of it, while they depended upon old-fashioned methods, aroused an opposition which has not ceased. This in time led to formal combinations, sometimes by a few merchants, sometimes by local organizations, and it has resulted in the introduction of adverse bills in the legislature of practically all states in the union. It was very early demonstrated that Mr. Sperry could not hope for success without strong oppo- sition. This he had in fullest measure, for the business, in its very nature, permitted of com- petition by any one and every one those, who were scrupulous and those who were unscrupulous, those who were businesslike and those who were unbusinesslike each and every one considered that they were entirely capable of operating a competitive business though they had given no time to its study nor to the elements which go to make a successful and profitable business. In spite of this opposition, the business under Mr. Sperry pros- pered and grew, and the next forward step may be said to have been taken when a contract was signed with O'Gorman's Depart- ment Store in Providence, Rhode Island. Such a fine organization was obtained that results were immediate, and the general atten- tion of merchandising retailers was attracted to the "S.&H." Company for perhaps the first time. The following year Houghton & Dutton of Boston joined the "S.&H." 13 OUR SI L VK It ANNIVKRSA IIY family, and again success attended his efforts. Other cities and towns were being opened and "S.&H." Branches were being established and operated as trading stamp companies under the name of the local city or town. In the mean- time a small office was opened at 320 Broadway, New York City, to facilitate the purchase of merchan- dise and as a home office from which to direct the rapidly increas- ing number of branches throughout the country. The growth of the business could be seen in the growth of the Home Office; the one small office became two offices, then three offices, until within a few years an entire floor was occupied and later a considerable portion of a second floor. About this time, Mr. Sperry thoroughly appreciated the favor- able attention of the merchants of the country as a result of the O'Gorman and Houghton & Dut- ton contracts. With the good judgment and clear vision which were so much a part of him, he sought a contract with a firm of national importance for the pur- pose of more clearly demonstrating to the merchants throughout the country the real value and stability of the business he was engaged in. The result was a contract with the Siegel-Cooper Company of New York City, a firm of high standing and national reputation. As Mr. Sperry anticipated, the association with Siegel-Cooper Company gave him an open sesame in practically every city in the United States, and the business grew so rapidly that a large force of men was re- quired for no other purpose than to open branches and establish the Company's business in the cities of practically every state in the Union. The adoption of the little green stamp by the Atlantic & Pacific Tea Company followed very shortly after-ward. As the result of an experiment in one of their stores in the city of Buffalo, N. Y., it was adopted for all of their stores, and, as they had a large number of stores in a great many cities and towns, this like- wise added to the constantly grow- ing number of branches. The de- velopment of the business in the west was then taken up with the result that Rothschild & Company of Chicago soon adopted the "S.&H." Green Stamp system; and crossing the continent, many of the larger merchants in various cities also adopted the same, in- cluding the Boston Store of Mil- waukee, the Emporium of St. Paul, Olds, Wortman & King of Port- land, Oregon, the Palace Depart- ment Store of Spokane, Washing- ton, the Fifth Street Store, Los Angeles, California. In this connection, let it be said that the opening of towns and cities has gone on consistently since 1896, and that the number of employes on the payroll at one time has approximated 2,500. This growth to me represents the embodiment of the ideals expressed by our own American philosopher Emerson. It is impossible for me to say which one of his essays I like the best; I think his essays on "Beauty" and "Power" have perhaps influenced me most in connection with my interest in this business. They both have such boundless value and are so filled with such fine sequences. And it is my pleasure today to hand each one of you a copy of this little book, with the sincere wish that you may find as much helpful instruc- tion in it as I have always been able to extract. 14 O (I R S 1 L V E R A N N J V E R S A R V In 1904, Mr. William M. Sperry acquired the stock of the Company held by Mr. Shelley B. Hutchin- son, and from that time until the death of Mr. Thomas A. Sperry the two brothers were associated in operating the Company's busi- ness. The business was not without its vicissitudes. Providence, after making a wonderful start, was interrupted by adverse legislation. A favorable court decision followed, however, and after two years Providence again went ahead with its old time enthusiasm. Progress in Boston and practically every city in Massachusetts was check- ed by the same means. A long legal controversy ensued, but a complete victory ultimately perched on our banners. The State of New York followed suit, but again the victory was ours. In fact, the struggle seemed never ending, one state after another attempting to destroy Mr. Sperry \s efforts by class legislation, all of which has resulted in the loss of only one state; and the latest decision of the Supreme Court of Utah reads that the adverse de- cision in Kansas was on insufficient grounds. Thus did Mr. Sperry labor for seventeen years in the extending of his business ideas and in fighting for the right to do business accord- ing to his ideas and his ideals. He had surrounded himself with a highly-trained force of men, and in his later years was enabled to give considerable of his time to travel, public matters, the estab- lishment of his home, education of his children, and, to some ex- tent, he was privileged to enjoy the fruits of his endeavors. His relaxation from business cares, however, was never great, for he always kept in close touch with all departments of his business and with his business associates. Mr. Sperry died on September 2, 1913, having demonstrated the practicability of the ideas con- ceived by him as long ago as 1891. He left a firmly established business upon which his personality and individuality are forever impressed. He fought a good fight and de- serves the accolade if any man ever did. At Mr. Sperry 's death, which happened suddenly and most un- expectedly, I found myself, in the watches of the night, left with a charge and upon me fell the burden of caring for the business which he had founded. The bur- den has never seemed too heavy, for it has been lightened by willing hearts and helpful hands. The Great Reaper has gathered some of our splendid men, but I do believe that these crushing ex- periences have drawn us all more closely together and made firmer that crimson cord of friendship which knows no separation. The day that Mr. Sperry died, I asked Mr. William M. Sperry to become the president of our Company, and he retained that office until January, 1915, when he was succeeded by Mr. George B. Caldwell, an old-time friend of Mr. Thos. Sperry and one who had been closely associated with him for many years and who well knew his aims and his ambition, and who was, to a considerable extent, familiar with the business itself, I have never taken any active position publicly in the affairs of the Company, but my interest has never known abatement since the days when Mr. Sperry first con- ceived his ideas about the premium business and proceeded to set them in motion. My life seems Main Entrance and Reception Hall. fairly entwined with The Sperry & Hutchinson Company. The idea must have been communicated to me in the morning of my life, and I have observed the growth and the development of this idea into a stalwart business tree whose branches cover not only our own United States, but have spread over the seas and are doing so much in the promotion of economy and domestic welfare. The cares in connection with this business, which fell upon my shoulders at Mr. Sperry's death, have been lifted by Mr. Caldwell and his able associates, and I feel that the future of the Company is in safe hands and that its prospects are brighter than ever before. I seem to see this in the Spirit of Co- operation which has been fostered between the Company and the merchants, its clients, between the Company and the public which it serves; I seem to see it in the close co-ordination and the good fellow- ship which exists in all depart- ments of the business; and in the constantly enhancing reputation which the "S.&H." Company en- joys in the minds of merchants, public men, and associations of many kinds. I think I find my- self today looking beyond the snow line, and the beautiful picture, which symbolizes the Spirit of Co- operation, and which we are gathered here today to dedicate, does, in my estimation, represent the fulfillment of Mr. Thomas A. Sperry's ambition, and I believe that his life work will be judged in a Court where there is no Statute of Limitations. Mr. Caldwell thanked Mrs. Goodrich for her talk and then in a happy little speech introduced Mr. Thomas A. Sperry's youngest daughter, Miss Marjorie, who read the following little story of "The Little Green Stamp" which had 1C President's Office. been submitted by Jane J. Martin, our Advertising Manager, although not for this occasion. Miss MARJORY SPERRY: "There are many times when we all may, with modesty, speak of our useful- ness and accomplishments. I think that time has come with me the time to tell you the story of what my 'green-ness' represents to you; to your employers; and to your customers. Though I am small and green, yet I have sticking qualities, and will hold fast when placed in the little album provided for me. I am beloved by collectors, not for my beauty or collective worth, but for my 'saving' value in re- deemability. Merchants in various lines of business throughout the country have become fond of me because I build up friendship with their customers, create more business and incidentally increase profits. And you know, every merchant likes his business to grow. More than this, I am the little wedge that helps him do business on a cash basis, meaning less risk and more turnover for him. Do you wonder he approves of me? Sales people (even those who once frowned on me as a nuisance) have become my friends. Through me, they have come to know their customers. I have been the lever that influenced these customers to come back to them for personal service. Thus have I built up the amounts on the books of individual sales people, and have made these people more valuable to their em- ployers. In many cases I have been directly responsible for in- creased salaries to sales people, who, recognizing my value, have worked me hard and helped not only their concerns and their cus- tomers, but themselves. And Customers how they de- 17 OUR SILVER ANNIVERSARY pend on me. Many a home have I helped to furnish for them, when they had not the money with which to purchase needfuls. Many an empty corner have I filled with things of beauty and practical value. Many a heart have I gladdened with some long wanted possession, that they could not have acquired without my aid. Yes, I can truthfully say I have brought joy and happiness to many. Also, I help customers pay cash and eliminate the awful bugbear of accumulated bills. With me at hand to guide them, they can hold up their heads in pride and say *I owe nothing.' Thrift is my middle name. I am the most active little square of green paper you ever saw. I represent the purchasing power of ten cents. I am your friend. When making sales, use me as much and as often as you like. I will not fail you." She was followed by the Presi- dent, who in the following words gave us the aims, purposes and principles of our business through- out its existence. PRESIDENT GEORGE B. CALD- WELL: Twenty-five years ago the Founder of this business organized the partnership of Sperry & Hutch- inson, which later (in 1900) was incorporated as The Sperry & Hutchinson Company. Prior to that time Mr. Sperry had been a salesman and had learned something of the problem of competition in retail merchan- dising and had also learned that there is no such thing as the ownership of cash trade. His ex- perience had taught him that credit was expensive, required a large capital, incurred the possi- bility of some loss, and is the antithesis of thrift and good busi- ness. He recognized that the word "BUSINESS" is the one word emblazoned on the mind of every adult American, including the man who earns and the woman who saves that the retail merchant was at times helpless and never independent, though a necessary and the largest agency in the problem of distribution. He stud- ied this situation and he observed that the majority of people were comparatively poor, and that they, better than any one else, knew the value of small savings. Because he was a keen observer, and withal very human, he knew the natural inclination of the consumer, that, all things being equal, the consumer buys where quality and price are most attractive. Knowing these fundamental business problems and human characteristics, he thought out and applied a simple system of automatic saving, on what one spends, that was co-operative as between the retail merchant and his customer. He developed and used the Stamp as the token of value. He wisely determined to use something of this sort because one Stamp represents a fraction of one cent and must of necessity be both cheap and convenient. Because this Stamp was used exclusively by retail merchants, it quickly became known as the "Trading Stamp." To make it of value to the merchant, he put three important limitations upon its use one, that it should not be sold and made available for every merchant; otherwise it would not be of the greatest value to the merchant using it; another l|ial it. should bo given out for cash trade in the form of a discount; the ob- ject here was to reduce credit and promote thrift; and the third li mi- OUR SILVER ANNIVERSARY tation was that it should be re- deemed in lots of 1,000 when properly assembled in a book which he furnished each customer, so that in the course of their trading in different places where Stamps were given, these Stamps could be accumulated and placed in this book until filled, when it was then ready for redemption. Having arranged this matter for the benefit of the merchant and created the Stamp, stamp book, and fixed the denomination in which it should be redeemed, it still remained for him to prepare for the redemption of the same; hence he began to establish not only one but many places in the various im- portant cities of the United States in which he was doing business, where the people could go with these filled stamp books and get them redeemed. It is here that he recognized a very important fea- ture of the "S.&H." Company and the merchant alike, and that was the element of service. In those days, as to-day, merchants were offering many kinds of service, from the skilled and gracious clerk and free delivery, to the nursery, rest- room, concert and the return of goods after being purchased and paid for. The merchant found our system of service built trade and brought in the cash and was by far the cheapest service he could buy; and he also found that it was appreciated by his customers, built up good- will and was actually the "tie that binds" as between the merchant and the community he seeks to serve. It did this twenty- five years ago it, does it to-day. In the selling of this Co-operative Discount Plan, Mr. S perry built up an organization of salesmen of the highest type; while in the operation of these stores he likewise built an organization of highly specialized people to insure the success of the service he had sold. In twenty- five years, the "S.&H." business has grown and spread from Bridge- port, Connecticut, to nearly every state, city and town in the United States, and is known also to nearly every live, progressive merchant and by every frugal housewife. We have several instances of small homes having been actually fur- nished from the stamps obtained in trade and redeemed through our stores. Very naturally, and justly, the public has not only recognized this service more and more each year, but the growth of this busi- ness has impelled the growth of other stamp companies and the use of the coupon by manufac- turers. The coupon and other stamps differ in their application, and sometimes in their denomina- tion and results, but one principle is the same co-operation of mer- chant and consumer, the building up of volume and good-will on a cash basis, a service that makes possible the healthy expansion of business wherever it is practised, as thousands of merchants using this "silent salesman" to-day can testify. Due to the functioning of immutable, economic law T s that dominate all business, and the ac- ceptance of the idea that competi- tion is the life of trade and is demo- cratic rather than imperialistic, the Trading Stamp of twenty-five years ago has gone through many vicissi- tudes and has stood the test of time as an economic factor in the great problem of distribution. Our busi- ness has grown from practically nothing in 1890, when it started, to a volume of several million dol- lars annually, and the "S.&H." Green Trading Stamp has held the 1!) Office of Mrs. Kate Sperry Goodrich. position of first, largest and best during all this period. In addition to this, Mr. Sperry 's original idea has never been im- proved upon because it was funda- mentally sound. By establishing redemption stations at different points in the United States where a book of stamps obtained by trading in New York can be redeemed in Chicago or San Francisco, it has become national in its scope, and in this the "S.&H." Discount Service has no competitor. Mr. Sperry also left another valuable asset, and that was his organization of trained men and women. There is no selling organization that I know that is more virile or faces the open field of competition with greater zest and desire and accom- plishes greater results. It has car- ried the "S.&H." banner from coast to coast and from north to south. It has even gone so far as to reach several foreign countries, in some of which it has played as important a part as in America. To-day this Company points with much pride to the fact that it has many thousands of merchants, some of whom have been with the Company ten, fifteen and twenty years, and points with a greater satisfaction and pride to the fact that many of them who started with a gross volume of two hundred to two hundred and fifty thousand dollars per year are now successful merchants doing a business of sev- eral million dollars per year. That this may not have been all due to the use of the Trading Stamp is not denied or even contended, but we have absolute knowledge of the vir- tue of the Trading Stamp in doing its part and many merchants ready to vouch that it has done more than they expected. During this twenty-five years there have been many imitators some impostors, some failures, and uU 1 B Office of Treasurer and Vice-President. much discussion. Largely because it has been restricted in its use and thus made an effective, competitive feature of retail trade, it has drawn the fire of the competitive mer- chant, especially the one who is so selfish that he will not or cannot understand the benefits of co-op- erative profit-sharing. These mer- chants have frequently organized to drive the discount idea out of retail trade. They themselves ask and receive discounts on what they buy, but deny this privilege to those who buy for them. The incon- sistency of their position and their selfishness they do not admit, but revel in calling a trading stamp, es- pecially the "S.&H." Green Trad- ing Stamp, because it is the largest and strongest, a "trust" and the stamp service the "business of a parasite." For many years, Mr. Sperry paid little or no attention to these attacks, and not until they became so virulent in form through merchants' associations and legis- lative enactment did he decide to meet them ; and when he did he de- fended his business as he did every- thing with his whole heart and whole soul and whole strength, until nearly every Supreme Court in nearly every state in which we do business has said the "S.&H." serv- ice is as legitimate as any other form of service, any other form of advertising, and is a matter be- tween the merchant and his cus- tomer. It is neither a trust nor a parasite, and as a business it is en- titled to all the protection and re- spect that the Fourteenth Amend- ment of the Constitution of the United States gives to any business. Do you realize, and does any one realize, that we have lived the twenty-five years and have never violated our contracts with the holder of a book of Green Stamps? In fact, we have gone so far in many instances as to redeem partially OUR SILVER ANNIVERSARY filled books, to secure extra mer- chandise and sometimes pay cash, so that of all the stamps issued each year, we are now redeeming about 95%. Do you realize (because few people do) that covering the period of our existence about $100,000,000 in retail value for standard mer- chandise has been distributed as real profit-sharing as a discount to those who have given their cash trade of approximately four billion dollars to the merchants using the "S.&H." service? This will give you and the merchants using "S.&H." service some conception of what the business has been and is and will continue to produce for those using it. ^ The Company possesses to-day $1,000,000 capital and has about $3,800,000 of total assets and is at the head as the leader in the devel- opment and use of premium service in merchandising. During the last twenty-five years the stamp, which was put out originally for about $5.00 a thousand to the merchant, has, like all other items of cost in merchandising, been reduced and has for the past ten years followed closely a standard of price at which v it is now sold to the merchant. During all of its life it has increased in its efficiency, as illustrated by the large percentage of redemptions. To-day this high efficiency excels all other kinds of service in the re- tail trade. Another important thing it has never been proven, though it has been tried, that it added anything to the cost of the article to the consumer, nor will it ever do so as long as trade is con- ducted on a competitive basis. Our Y service may and docs figure as a part of the cost of doing business, all of which expense is finally paid J by the consumer, but it pays its way as it goes to an extent that no other service does. The merchant who enjoys this service can count on operating with less invested cap- ital, prompt payment of accounts, smaller losses from doubtful ac- counts, and a satisfactory increase in the volume of his sales; and it frequently takes the place of other forms of service less desirable that are equally or more expensive, and to that extent is a further benefit to the merchant and consumer. For all of this, Mr. Thomas A. Sperry lived and died. He lived long enough, however, to be able to walk upon the stage of life with the consciousness of the conqueror, and to see co-operation and thrift practised by thousands of mer- chants and millions of housewives in a practical way throughout the United States, and all of this done through the agency of his little Green Stamp. Eight years ago lie was taken from us, yet lie laid the foundation for successful merchan- dising through the Spirit of Co- operation that one word that ex- presses reciprocity in trade, that one word that means so much in disposing of the troubles of a cha- otic world. Listen to what Arnold Abbott says about Co-operation: "Nothing happens without CO- OPERATION. That the simplest thing may happen the whole of NATURE CO-OPERATES, as in the forming of dewdrops, for in- stance. "CO-OPERATION has been the spirit, the backbone, the prime es- sential of every SUCCESS whether of business or science, transporta- tion or education, mechanics or politics, government or diplomacy. "Every employer judges his em- ployes by their ABILITY to CO- OPERATE. Subordinates pro- gress, other things being equal, a<- cording to their CAPACITY and '22 OUR SILVER ANNIVERSARY WILLINGNESS to CO-OPER- ATE. Executives retain their po- sitions only if they co-operate suc- cessfully with other executives and maintain CO-OPERATION among their workers. "Eliminate co-operation and we would have no railroads, no steam- ship lines, no department stores, no great manufacturing establish- ments, no music, no books, no gov- ernment. CHAOS would exist. "Since, therefore, CO-OPERA- TION is ESSENTIAL, common sense dictates that it should be HEARTY and COMPLETE. "Co-operation in business life means more than merely obeying orders. It means working with one's fellow employes WHOLE- HEARTEDLY. It means avoid- ing the friction of conspiracy, grouchy deceit, time-serving sel- fishness, indolence and inattention. It means TEAM WORK. The pennant winners of commerce are those who have best solved the problems of CO-OPERATION." Co-operation, insofar as the little Green Stamp could do it, has grown like the magnificent palaces in the Arabian Nights, and has brought success to thousands of merchants and consolation and comfort to mil- lions of American homes. Many of you here to-day knew Mr. Thomas A. Sperry. It is an added tribute to his memory and his many good qualities that the leading people in this organization, perhaps 75% of them, were given their start and received their specialized training under him. I also knew Mr. Thomas A. Sperry as a young man unmarried. Afterwards I heard him say that, except liis wife, I had picked one of the besl. that grew in Michigan. I knew him as a busi- ness man arid as a friend. As I re- call my acquaintance with him and his business career, I think he not only set the example, but taught us several important things: 1st To anticipate requirements; 2d To recognize no impedi- ments ; 3d To develop resources; 4th To master circumstances; 5th To act from reason rather than rule; 6th To be satisfied with nothing short of perfection. He succeeded because he was an organizer, a builder, and recognized the value of co-operation. Review^ for a minute his business organiza- tion: 1st A centralized authority vested in him as President and Managing Officer; 2d He was always a trustee; a trustee of the capital invested by the stockholders in this business; a trustee of the confidence of the merchants to whom he sold service and taught co-operation; a trustee of the men and women employed by this Company, whose daily bread and whose future was possi- ble through his leadership. We cannot erect a greater tribute to his memory than he himself erected. It remains for us to shoulder his burden and perpetuate and honestly administer the trust he has left behind. I frequently ask myself, are we equal to the task? Then I know we have done honestly what has been done, and I try to believe it would have his approval if he were here. The great business world should also be grateful for what he did, because, at a time like this, when the nerves of the pocketbook are everywhere most sensitive, the ideas he con- ceived and promulgated operate in the very highest degree to stimu- late arid maintain the maximum of co-operation, We possess an in- Office of Vice-President in Charge of Promotion and Operation. heritance in the Trading Stamp wherein the doctrine of chance does not exist, and as the day of small things has never passed and never will, we, of the "S.&H." family, take pride in being a part of the thing of which life is made. Volume of sales and good-will are just as great a problem to-day as they ever were and are just as much a fundamental of the success of any business. The individual mer- chant, or even the individual him- self, may feel that he or she is a trading stamp a small part of any business but business and individ- uals were never larger than to-day, and the trading stamp idea was never more valuable than it is at this very time, and co-operation was never more the problem of the hour. As symbolized by this excellent oil painting (unveiled by Miss Mar- jorie Sperry), representing the strength of the united trinity the "S.&H." Green Stamp, the mer- chant, and the consumer, carrying- forward in a larger way his wish and your loyalty and labor and mine, we lead to the one funda- mental thought, basic as to win- ning success in all endeavors CO-OPERATION. May I ask you all to rise while I offer this brief eulogy to our own as well as one of the world's bene- factors to Mr. Thomas A. Sperry, the Founder of the "S.&H." Green Trading Stamp, the man of zest and genius, who taught the world not only the value of small savings, but how to do it automatically; to Mr. Thomas A. Sperry, the pro- moter and salesman, who discov- ered a practical way of increasing volume and building good-will in the retail trade; to Mr. Thomas A. Sperry, the servant and benefactor of the rich and poor alike, who re- alized that all thrift is helpful, holy and begets happiness to him I dedicate this wonderful piece of art, on this, the 25th anniversary, of Legal Department. the business he founded and estab- lished. The artist, Raymond Perry, be- ing present, was then introduced by Mr. Caldwell. MR. PERRY : I very deeply appre- ciate the distinction that you con- fer upon me in inviting me to the dedication of your picture. As a usual thing, a great business or- ganization does not count art and the artist as elements necessary to its success; but when a business reaches unusual proportions it is usually found that its sponsors are possessed of a certain vision and imagination that lifts them above the plane of mere traders and en- larges their scope through an ap- peal to the more poetic side of humanity with which they deal. I cannot define art, and no one can, but we know that the achieve- ments of art are closely bound up with the best that mankind has attained. In the great war there was no sorrow so great, aside from that oc- casioned by the loss of human life, as that caused by the loss of irre- placeable art. Art is one of the things men fight for and long after the race of Egyptians, Grecians and Romans, as they were once known, have passed away, their art remains almost the sole witness and story- teller of their greatness. To me there are only two really essential habits that persist in man, and they are, art and business business and art one the comple- ment of the other. From before the earliest recorded history up to the present moment the man who is making a living for his wife and family is the unit upon which all business, great and little, is based; and when a man finds that he has satisfied the more material needs of existence, such as food and shel- ter, he reaches out for other satis- faction of a less palpable sort, but O ll R SILVER ANNIVERSARY just, as necessary, in the nature of menial, spiritual, or religious exer- cises, the enjoyment of beauty, decoration of his clothing, habita- tion, and the utensils with which he works. These things are all in the realm of art. It is most nat- ural then, when you come to think of it, that a great or- ganization like this, built, as it is, upon millions of the units that I have noted, should initiate the function which we now attend. There are var- ious ways in which art might visualize the meaning of this organ- ization. We might have approached the problem from a purely material point of view and made portraits of the personnel of the organization, of the buildings, great and little, which house its clients, the factories in many states and countries that furnish the mer- chandise for premiums that is part of this service. But who can hear the words of Mrs. Goodrich without sensing their epic meaning? Is there not something mysteri- ous, magical, in the growth of The Sperry & Hutchinson Company? Is there not something that can- not be explained along purely ma- terial lines? It does seem as though the principle upon which the busi- ness was founded were embodied in a veritable spirit that can breathe into this machine of an organiza- tion the breath of life and gild its successes and achievements with more than a glint of altruism. It is this aspect of this institution that I have tried to depict and I can best describe it by reading the following: ARTIST'S NOTE When I was commissioned to make this painting I began by con- templating the basic idea back of the "S.&.H." Green Trading Stamp and I was helped in this by my own exper- ience as a customer with thatstamp for many years. Then I set about to interpret that idea by symbols. Like all great ideas, it is a simple one, con- taining three elements: The merchant and his customer, present in every trade since time immemorial and another figure the modern thought of co-operation and serv- ice in mercantile affairs a figure illu- mined with disinter- estedness and with something of the ideal, the spiritual vision vitalizing her being. As a breastplate, like a priest of old, she wears her sign of familiar design and the colors of her gar- ment further carry out the theme of the green trading stamp. The merchant is represented as a responsible, middle-aged man his face a composite portrait of the best types of business leaders. Since buyers are mostly women, The Customer is represented as a woman the housewife to whom the responsibility of wise expendi- ture is a conscious duty faithfully performed. The Merchant and the Customer clasp hands, while above and be- tween, laying her hands upon theirs, stands the Spirit of Co- 26 Oil II SILVER ANNIVERSARY operation, who Juts glorified a more barter into a relationship of mutual confidence, satisfaction and profit. She is manifestly happy to he this binding tie and in her face is ex- pressed a conviction that this mutuality is good and admirable; and a gratitude that the aspirations of humanity, long repressed in busi- ness affairs, have now through her offices, made possible a service to all which of old was but the dream of a few. The costumes of the figures are classic, obviating any question of changing styles and by custom in- dicating abstract idea rather than the concrete. In the background, however, the stores and the homes are modern, suggesting the practical, present application of the ideas shown above. In the design of this picture there is a hint of the stamp itself. The arms of the Merchant and Customer form a curved band sim- ilar to the band on the Stamp carry- ing the words, "Trading Stamp." The large figure may be likened to the 10 in the back of the band. Also the oval in the Stamp is al- luded to by the outer contour of the two side figures, the lettering at top and a festoon at the bottom. There are many ways that we might have gone about to meet the problem of a picture for this occa- sion. We might have approached the problem from a purely material point of view and made portraits of the personnel of the organization, of the buildings, great and little, which house its clients, the fac- tories in many states and countries that furnish the merchandise for premiums that is part of this serv- ice; we might have gone so far as to use colored photographs. But our problem was approached in a dif- ferent manner. We have tried to work through symbols and in a more poetic way, an,d, in doing so, possibly we shall eliminate the diffi- culty of expressing impalpable things through material means. But, after all, our problem in that regard was simple, as we have sim- ple elements to deal with that will be understood by the persons who have but little time to look at pictures. Mr. Caldwell then asked Mr. James Ethridge, who was present with the artist, to say a few words: Mu. ETHRIDGE: Just one thought occurred to me when you were speaking about Mr. Sperry. I at- tended a dinner the other evening at which one of the speakers re- ferred to the "Fourth Dimension Man" and when you were speaking about Mr. Sperry, it immediately came to my mind that he was a Fourth Dimension Man. A Fourth Dimension Man is a man who not only has integrity, perseverance, enthusiasm and loyalty, but, last but not least, has vision. The Fourth Dimension Man. w^ould be Lincoln, Edison, Ford, and I be- lieve that Mr. Sperry was one of those men. Co-operation also to me means really giving more than you re- ceive, and I think from what I have heard this afternoon that The Sperry & Hutchinson Company certainly does that. EXPLANATION THE articles appearing upon the following pages were written by President C aid well, and originally appeared in "The Sperry Service Business Bulletin," our House Organ to mer- chants handling the "Sperry Service." They have received much complimentary notice. We have been obliged to decline so many re- quests for extra copies that we are taking the liberty of reproducing same herewith. True, they touch more or less upon our own business, but there is so much of sound common sense and good business judgment in them that we believe every business can find something of helpfulness therein. JANE J. MARTIN, Advertising Manager, The Sperry & Hutchinson Company. OUR SILVER ANNIVERSARY TWENTY-FIVE years ago the Founder of this business or- ganized the partnership of Sperry & Hutchinson, which later (in 1900) was incorporated as The Sperry & Hutchinson Company. Prior to that time Mr. Sperry had been a salesman and had learned something of the problem of com- petition in retail merchandizing and had also learned that there is no such thing as the ownership of cash trade. His experience had taught him that credit was expen- sive, required a large capital, in- curred the possibility of some loss, and is the antithesis of thrift and good business. He recognized that the word "BUSINESS" is the one word emblazoned on the mind of every adult American, including the man who earns and the woman who saves that the retail mer- chant was at times helpless and never independent, though a neces- sary and the largest agency in the problem of distribution. He stud- ied this situation and he observed that the majority of people were comparatively poor, and that they, better than any one else, knew the value of small savings. Because he was a keen observer, and withal very human, he knew the natural inclination of the consumer, that, all things being equal, the con- sumer buys where quality and price are most attractive. Knowing these fundamental business problems and human characteristics, he thought out and applied a simple system of automatic saving on what one spends that was co-operative as be- tween the retail merchant and his customer. He developed and used the Stamp as the token of value. He wisely determined to use some- thing of this sort because one Stamp represents a fraction of one cent and must of necessity be both cheap and convenient. Because this Stamp was used ex- clusively by retail merchants, it quickly became known as the "Trading Stamp." To make it of value to the merchant, he put three important limitations upon its use one that it should not be sold and made available for every mer- chant; otherwise it would not be of the greatest value to the merchant using it; another that it should be given out for cash trade in the form of a discount; the object here was to reduce credit and promote thrift; and the third limitation was that it should be redeemed in lots of 1,000 when properly assembled in a book which he furnished each customer, so that in the course of their trading in different places where Stamps were given, these Stamps could be accumulated and placed in this book until filled, when it was then ready for redemption. Having arranged this matter for the benefit of the merchant and created the Stamp, stamp book and fixed the denomination in which it should be redeemed, it still re- mained for him to prepare for the redemption of the same; hence he began to establish not only one but many places in the various impor- tant cities of the United States in which he was doing business where the people could go with these filled stamp books and get them re- 29 Merchandise Department. deemed. It is here that he recog- nized a very important feature of the "S.&.H." Company and the merchant alike, and that was the element of service. In those days, as to-day, merchants were offering many kinds of service, from the skilled and gracious clerk and free delivery, to the nursery, rest-room, concert and the return of goods after being purchased and paid for. The merchant found our system of service built trade and brought in the cash and was by far the cheap- est service he could buy; and he also found that it was appreciated by his customers, built up good- will and was actually the "tie that bonds" as between the merchant and the community he seeks to serve. It did this twenty-five years ago it does it to-day. In the selling of this Co-operative Discount Plan, Mr. Sperry built up an organization of salesmen of the highest type; while in the operation of these stores he likewise built an organization of highly specialized people to insure the success of the service he had sold. In twenty- five years, the "S.&H." business has grown and spread from Bridge- port, Connecticut, to nearly every state, city and town in the United States, and is known also to nearly every live, progressive merchant and by every frugal housewife. We have several instances of small homes having been actually fur- nished from the stamps obtained in trade and redeemed through our stores. Very naturally, and justly, the public has not only recognized this service more and more each year, but the growth of this busi- ness has impelled the growth of other stamp companies and the use of the coupon by manufacturers. The coupon and other stamps differ in their application, and some- times in their denomination and results, but one principle is the 30 General Office. same co-operation of merchant and consumer, the building up of volume and good -will on a cash basis, a service that makes possible the healthy expansion of business wherever it is practised, as thou- sands of merchants using this "silent salesman" to-day can tes- tify. Due to the functioning of immutable, economic laws that dominate all business, and the ac- ceptance of the idea that compe- tition is the life of trade and is democratic rather than imperial- istic, the Trading Stamp of twenty- five years ago has gone through many vicissitudes and has stood the test of time as an economic fac- tor in the great problem of distri- bution. Our business has grown from practically nothing in 1896, when it started, to a volume of sev- eral million dollars annually, and the "S.&.H." Green Trading Stamp has held the position of first, larg- est and best during all this period. In addition to this, Mr. Sperry's original idea has never been im- proved upon because it was funda- mentally sound. By establishing redemption stations at different points in the United States where a book of stamps obtained by trad- ing in New York can be redeemed in Chicago or San Francisco, it has become national in its scope, and in this the "S.&.H." Discount Service has no competitor. Mr. Sperry also left another valuable asset, and that was his organization of trained men and women. There is no selling organization that I know that is more virile or faces the open field of competition with greater zest and desire and accom- plishes greater results. It has car- ried the "S.&.H." banner from coast to coast and from north to south. It has even gone so far as to reach several foreign countries in some of which it has played as important a part as in America. 31 OUR SILVER ANNIVERSARY To-day this Company points with much pride to the fact that it has many thousands of merchants, some of whom have been with the company ten, fifteen and twenty years, and points with a greater satisfaction and pride to the fact that many of them who started with a gross volume of two hundred to two hundred and fifty thousand dollars per year are now successful merchants doing a business of sev- eral million dollars per year. That this may not have been all due to the use of the Trading Stamp is not denied or even contended, but we have absolute knowledge of the virtue of the Trading Stamp in do- ing its part and many merchants ready to vouch that it has done more than they expected. During this twenty-five years there have been many imitators, some impostors, some failures, and much discussion. Largely because it has been restricted in its use and thus made an effective, competitive feature of retail trade, it has drawn the fire of the competitive mer- chant, especially the one who is so selfish that he will not or cannot understand the benefits of co-op- erative profit sharing. These mer- chants have frequently organized to drive the discount idea out of retail trade. They themselves ask and receive discounts on what they buy, but deny this privilege to those who buy from them. The inconsistency of their position and their selfishness they do not admit, but revel in calling a trading stamp, especially the "S.&H." Green Trad- ing Stamp, because it is the largest strongest, a "trust" and the stamp service the "business of a parasite." For many years, Mr. Sperry paid little or no attention to these at- tacks, and not until they became so virulent in form through mer- chants' associations and legislative enactment did he decide to meet t hem ; and when he did he defended his business as he did everything- with his whole heart and whole soul and whole strength, until nearly every Supreme Court in nearly every state in which we do business has said the "S.&H." service is as legitimate as any other form of service, any other form of adver- tising, and is a matter between the merchant and his customers. It is neither a trust nor a parasite, and as a business it is entitled to all the protection and respect that the Fourteenth Amendment of the Constitution of the United States gives to any business. Do you realize, and does any one realize, that we have lived the twenty-five years and have never violated our contracts with the holder of a book of Green Stamps? In fact, we have gone so far in many instances as to redeem par- tially filled books, to secure extra merchandise and sometimes pay cash, so that of all the stamps is- sued each year, we are now re- deeming about 95%. Do you re- alize (because few people do) that covering the period of our existence about $100,000,000 in retail value for standard merchandise has been distributed as real profit sharing as a discount to those who have given their cash trade of approxi- mately four billion dollars to the merchants using the "S.&H." serv- ice? This will give you and the merchants using "S.&H." service some conception of what the busi- ness has been and is and will con- tinue to produce for those using it. The Company possesses to-day $1,000,000 capital and has about $3,800,000 of total assets and is at the head as the leader in the devel- opment and use of premium service OUR SILVER ANNIVERSARY in merchandising. During the last twenty-five years the stamp, which was put out originally for about $5.00 a thousand to the merchant, has, like all other items of cost in merchandising, been reduced and has for the past ten years followed closely a standard of price at which it is now sold to the merchant. During all of its life it has increased in its efficiency, as illustrated by the large percentage of redemp- tions. To-day this high efficiency excels all other kinds of service in the retail trade. Another impor- tant thing it has never been proven, though it has been tried, that it added anything to the cost of the article to the consumer, nor will it ever do so as long as trade is conducted on a competitive basis. Our service may and does figure as a part of the cost of doing business, all of which expense is finally paid by the consumer, but it pays its ways as it goes to an extent that no other service does. The mer- chant who enjoys this service can count on operating with less in- vested capital, prompt payment of accounts, smaller losses from doubt- ful accounts, and a satisfactory in- crease in the volume of his sales; and it frequently takes the place of other forms of service less desirable that are equally or more expensive, and to that extent is a further bene- fit to the merchant and consumer. For all of this, Mr. Thomas A. Sperry lived and died. He lived long enough, however, to be able to walk upon the stage of life with the consciousness of the conqueror, and to see co-operation and thrift prac- tised by thousands of merchants and millions of housewives in a practical way throughout the United States, and all of this done through I lie agency of his little ( Jreeii Stamp. Eight years ago he was taken from us, yet he laid the foundation for successful merchandising through the Spirit of Co-operation that one word that expresses reciprocity in trade, that one word that means so much in disposing of the troubles of a chaotic world. Listen to what Arnold Abbott says about Co- operation : "Nothing happens without CO- OPERATION. That the simplest thing may happen the whole of NATURE CO-OPERATES, as in the forming of dewdrops, for in- stance. "CO-OPERATION has been the spirit, the backbone, the prime es- sential of every SUCCESS, whether of business or science, transporta- tion or education, mechanics or pol- itics, government or diplomacy. "Every employer judges his employes by their ABILITY to CO-OPERATE. Subordinates progress, other things being equal, according to their CAPACITY and WILLINGNESS to CO-OPER- ATE. Executives retain their positions only if they cooperate successfully w r ith other executives and maintain CO-OPERATION among their workers. "Eliminate co-operation and we would have no railroads, no steam- ship lines, no department stores, no great manufacturing establish- ments, no music, no books, no gov- ernment. CHAOS would exist. "Since, therefore, CO-OPERA- TION is ESSENTIAL, common sense dictates that it should be HEARTY and COMPLETE. "Co-operation in business life means more than merely obeying orders. It means working with one's fellow employes WHOLE- HEARTEDLY. It means avoid- ing the friction of conspiracy, grouchy deceit, time-serving sel- fishness, indolence and inattention. Advertising Department. It means TEAM WORK. The pennant winners of commerce are those who have best solved the problems of CO-OPERATION." Co-operation, insofar as the little Green Stamp could do it, has grown like the magnificent palaces in the Arabian Nights, and has brought success to thousands of merchants and consolation and comfort to mil- lions of American homes. Many of you here to-day knew Mr. Thomas A. Sperry. It is an added tribute to his memory and his many good qualities that the lead- ing people in this organization, per- haps 75% of them, were given their start and received their specialized training under him. I also knew Mr. Thomas A. Sperry as a young man unmarried. Afterwards I heard him say that, except his wife, I had picked one of the best that grew in Michigan. I knew him as a business man and as a friend. As I recall my acquaintance with him and his business career, I think he not only set the example, but taught us several important things : 1st To anticipate requirements; 2d To recognize no impedi- ments ; 3d To develop resources; 4th To master circumstances; 5th To act from reason rather than rule; 6th To be satisfied with nothing- short of perfection. He succeeded because he was an organizer, a builder, and recognized the value of co-operation. Review for a minute his business organi- zation: 1st A centralized authority vested in him as President and Managing Officer; 2d He was always a trustee; a trustee of the capital invested by the stockholders in this business; a trustee of the confidence of the mer- chants to whom he sold service and taught co-operation; a trustee of 34 Sperry Realty Office. Assistant Treasurer's Office. the men and women employed by this company, whose daily bread and whose future was possible through his leadership. We cannot erect a greater tribute to his memory than he himself erected. It remains for us to shoul- der his burden and perpetuate and honestly administer the trust he has left behind. I frequently ask my- self, are we equal to the task? Then I know we have done hon- estly what has been done, and I try to believe it would have his ap- proval if he were here. The great business world should also be grate- ful for what he did, because, at a time like this, when the nerves of the pocketbook are everywhere most sensitive, the ideas he con- ceived and promulgated operate in the very highest degree to stimulate and maintain the maximum of co- operation. We possess an inheri- tance in the Trading Stamp wherein the doctrine of chance does not ex- ist, and as the day of small things has never passed and never will, we, of the "S.&H." family, take pride in being a part of the thing of which life is made. Volume of sales and good will are just as great a problem to-day as they ever were and are just as much a fundamental of the success of any business. The individual mer- chant, or even the individual him- self, may feel that he or she is a trading stamp a small part of any business but business and in- dividuals were never larger than to-day, and the trading stamp idea was never more valuable than it is at this very time, and co-operation was never more the problem of the hour. As symbolized by this excellent oil painting representing the strength of the united trinity the "S.&H." Green Stamp, the mer- chant, and the consumer, carrying forward in a larger way his wish and 35 Auditing Department. your loyalty and labor and mine, we lead to the one fundamental thought, basic as to winning suc- cess in all endeavors CO-OPE- RATION. May I ask you all to rise while I offer this brief eulogy to our own as well as one of the world's bene- factors to Mr. Thomas A. Sperry, the Founder of the "S.&H." Green Trading Stamp, the man of zest and genius, who taught the world not only the value of small savings, but how to do it automatically; to Mr. Thomas A. Sperry, the pro- moter and salesman, who discov- ered a practical way of increasing volume and building good-will in the retail trade; to Mr. Thomas A. Sperry, the servant and bene- factor of the rich and poor alike, who realized that all thrift is help- ful, holy and begets happiness to him I dedicate this wonderful piece of art, on this, the 25th anniversary, of the business he founded and established. GEO. B. CALDWELL, President, The Sperry & Hutchinson Co. 36 SERVICE SERVICE is defined by Web- ster as "The performance of labor or offices at the command of or for another." President Eliot of Harvard says, "To be of service is a solid founda- tion for contentment in this world." Some folks wonder why I like the Trading Stamp business. My answer is, a larger field for render- ing service a service that involves a benefit to many millions of consumers and that aids merchants using our System with their great problem of distribution. It is also one of the practical avenues of teaching thrift to the consuming public and the spreading of the gospel of good-will through the agency of the merchant who shares profits with his cash customer. This is the true vision in the field of the Trading Stamp, whether it is green, gold, blue, black, Eagle or star. In putting the same into practical use, however, it is fraught with all the problems of the merchant plus those of organization and operation as a company that sells a service and afterward makes good or renders a service. Those who knew me as a banker know I was raised in the Spartacan field of integrity. Those who dealt with me in person returned because I was able to render them a service. Those who know me as President of The Sperry & Hutchinson Com- pany know I have not changed and know how hard I have tried to cleanse the public mind from its prejudices. I realize that 1 haven't accomplished everything in this respect, but I do know that I have accomplished much and am on the right road to win the confidence of the open minded. Last month I published in this Bulletin the financial statement of The Sperry & Hutchinson Com- pany as of December 31, 1919, and sent a copy of the same to the principal merchants using our Sys- tem. This statement showed over three million dollars of clean assets. It showed over one million one hundred thousand dollars in stamp reserve, money collected from the merchants for stamps issued by them but not yet redeemed by us. In this we are acting as a trustee. And it is that same confidence that has made large banks in point of deposits and large insurance companies in amount of insur- ance written. As a banker I consider this one of the highest compliments that can be paid me and my Company. It is the fullest expression of confidence. In the line of giving you good service I take some pride in not only assuming this responsibility, but, as an offset, in presenting you a very liquid financial statement which I consider a very excellent one. A reserve fund invested in liquid assets, as well as our capital and surplus account, is the insur- ance to every merchant for the redemption of every stamp issued by him to his customers. The good merchant recognizes this, and therefore this is progress in rendering a service that I am sure will be appreciated. The progress I can see is that I 37 SERVICE hope I have gained your confidence, that I know I have increased our business, and that my own con- science is very clear as to the im- proved condition of our own Com- pany financially. However satisfactory may be our financial statement, I recog- nize, as you do, that every premium service fails or succeeds according to the quality of its premiums, which, in our case, are largely standard merchandise. A filled book of stamps must have a satisfactory value in the hands of the collectors to keep them in- terested and on the System. A record of twenty-four years of this Company's existence discloses to me that over Sixty Million Dollars worth of merchandise has been purchased by us and distributed to collectors in nearly every State in the Union in the redemption of stamps given by the merchants with whom they have traded. Many other companies have been using stamps and coupons until to-day there is an established "con- sumers' appetite," so to speak, for these tokens of a discount for cash trade. This is the thing the mer- chant expects and buys when he contracts for our service or uses premiums in any way. How well, then, can we render this service? It might be that the answer lies in our past growth but I am looking forward to our future growth and success, and that is before us. When I tell you that redemptions for the past five years in this Company are 96% of our issue, I am stating a fact of great im- portance to the merchant be- cause he knows his customers save and redeem what he gives them as a discount for their cash trade to the customer or consumer because in the majority of cases they have been satisfied and continue on the System and buy where they can fill their stamp books. To them, then, the premiums given by us have been and are an inducement to the company selling the service because it has fulfilled its promise, completed its service. You will recall the days when stamp and coupon companies had a small redemption. Every new company has to live a number of years to build up a clientele that will assure it a large redemption. And as a part of the service this certainly grows more valuable to the merchant or manufacturer if the Service Company has years of success to point to and conducts its business honorably and with ability. I have no criticism to make of others, but I am one of those that wish our redemptions equalled 100%. I could then claim that the value of my Company's stamp would be as great as it could ever be made and that no other com- pany could excel in this particular service. The merchant's cus- tomer would be realizing every ounce of virtue in this discount or profit sharing. In this respect I belong, perhaps, to the new school. Certainly it is so much a part of the service of any stamp company and so valuable a thing to the mer- chant that I am mentioning it to you so that your attitude toward me and my Company will not be one of believing that the stamps you pay for are not redeemed by us. They are either redeemed or a reserve fund is set up for those that are unredeemed, prepared to take care of them when they are presented. And certainly a 96% redemption is something to think about and to talk about. 38 SERVICE The rendering of this kind of service requires, as you can readily understand, the keeping of a large stock of standard merchandise. We are trying to keep it fresh and clean and always on hand in a variety and quality to please the clever shopper of today in six hundred different redemption sta- tions from the Atlantic to the Pacific. This merchandise service is, in my judgment, the life of our business and our greatest problem. We have given it much thought and attention during all of our existence and are intensifying this branch of our service at present. With us the keeping of stock in a branch store is done by the local branch manager sending in requi- sitions for the things that he is out of, or liable to be out of, and we in the Home Office collect those requisitions from all our various stores and, by buying in quantity, we give the best value and take all the advantage that the market can afford us. Our buyers are con- tinually in the market, renewing orders for premiums that are popu- lar, looking for new things to re- place those we can no longer ob- tain. And our shipping depart- ment is seeing that the goods are delivered as per order and as per agreement with manufacturers. Our turnover and our inventories are carefully studied. Our com- plaint department, like that of most merchants, tells its story and is greatly diminishing. The in- crease in our redemptions has increased the demand upon use, but it has increased the service that we are able to render and has, I may say, greatly improved it. Fraught as we have been and still are by war conditions and after effects, we have proven what two years ago I preached to every one of my assistants, "That it was the time to make the effort of our lives to render a service." That we have not made the money we should is because we did not in- crease to the merchant the cost of our service. But this is beside the question. I am trying to please both mer- chant and customer and shall continue to try and do even better in the future than I have in the past. This problem is being rapidly solved, and as merchandise is easier to get and conditions im- prove there should be a better service rendered in this respect. I only ask every merchant using our System to visit our redemp- tion station; examine if he pleases our redemption records, but cer- tainly look over our stock; talk frankly and freely with our local manager, and write me any sugges- tions that may be thought helpful, both as regards stockkeeping and storekeeping. My Company is a service company nothing else. It is your agent and your servant so long as you are our customer. It is your confidence and co-operation I want and must have if I succeed in fulfilling my hopes and ambi- tions of rendering a better service each year to a greater number of merchants and consumers. Office of the Purchasing Agent. Coupon Exchange Department. 40 ETHICS VS. PRACTICAL BUSINESS TIME was when a merchant sold his merchandise largely upon the age of his house, character of his personnel and the quality of his goods. But within the last few years cash and carry chain groceries economy stores- mail order companies and large syndicate department stores have changed the whole aspect of mer- chandising until what was con- sidered ethics in business twenty, aye, ten years ago must have changed according to the changes that have been made in merchan- dising. A few merchants still talk about "ethics" and "dignity" in their business, but what they mean to say is the method of conducting business according to their notion or ideas and not according to the present day custom, because ethics is nothing but a system of principles and rules concerning duty, whether true or false, and applies to a single class of human actions in this case merchandising. Time was when the organizers of retail druggists associations had all or nearly all the retail druggists of the country swelled up with the idea that they were really "pro- fessional" men, and, being "pro- fessional," they must not under any circumstances do anything so un- ethical as to offer trading stamps for the purpose of building up their business. This was fine for awhile and would have remained fine if everybody was as busy keeping their robes of dignity from slipping off as were these druggists who stood for that injection of profes- sional serum. But then came the modern chain drug store, smashing into that dignity pose, and making the word "ethics" sound like a swear word to every druggist in the country who had fallen for it. The druggists became aroused by an undignified and unethical competi- tion (using their own statement), and in the race with competition and to keep up sales, installed stamps and used them for business building purposes. Those who adopted them before the chain drug store hit the town held most of their trade, and those who adopted them after the cyclone had struck the town, and after they found themselves obliged to defend the business they had devoted years to building up, are very grateful for the co-operative feature and the pulling power. We have some mighty fine stamp-issuing drug stores, also boot and shoe stores, as well as many of the other variety. The point here is that the mer- chant to-day using stamps does not labor under any delusion as to their being ethical or unethical. He is face to face with the problems of practical business and the thousand things that are being used by his opponents to secure trade and hold it; and to him trading stamps are but one of the many methods, but also to him is one of the best methods that he has found, expense considered, that will keep his organization of buyers coming back and away from the store of "cut prices" and "Special Sales." It would seem to me that business ETHICS VS. PRACTICAL BUSINESS in every line is fast approaching not an unethical or an undignified posi- tion, but a more ethical and a more dignified position. The definition of dignity is "to distinguish by some excellence," or "that which gives celebrity." Trading Stamps given as a discount for cash trade does not destroy the quality of the goods, it does not partake of "Spe- cial sales," or a cut in prices it is a distinguishing characteristic to give a discount for cash in any line of business. It is a trend of the times to share profits with your customers as well as with your employes, and some of the oldest and largest and best houses in the country have changed their whole business, and therefore by changing their point of view have changed the ethics or dignity that governs. It seems to me we all overlook that fact in con- demning the other fellow's point of view when it is up to every mer- chant to promote his own business in his own way, he having volun- tarily engaged in business and in- vested his capital for profit. Why should he not have the right to do those things that produce results for him? That they be wholly consistent with the opinions of his competitors does not seem to me to be necessary. The principal point is, are the things you are doing beneficial to the consuming public and to yourself and do they produce results? Bearing upon this very subject is the opinion of Ex-Gov. Judson Harmon of Ohio who was also attorney-general of the United States during the Cleveland admin- istration. He said in vetoing a bill against the use of trading stamps: "This is an unwarrantable at- tempt to interfere with the liberty guaranteed to every citizen to dis- pose of his property on his own term. Purchasers of goods need not accept such stamps unless they wish to do so. They are merely an inducement to trade, whose effec- tiveness depends on the attractive- ness of the terms offered. They contain no uncertainty, depend on no chance, and therefore do not appeal to the gambling inclination which it is the policy of our laws to restrain. "To advertise one's business is an essential part of the right to carry it on, and the sale of trading stamps, etc., to be used by other merchants, if they are willing to do so, is a perfectly legitimate mode of adver- tising which may also properly in- clude a profit for the cost of pre- paring and handling the stamps. It is not within the powers gran fed to the general assembly directly, or indirectly, to deny this right. It is common to deny this right, but if some do not choose to exer- cise it they cannot call in the state to take part against their com- petitors who do." THE BUYER'S MARKET IF we look around us for some- body to put a sudden, or even a moderate, stop to the wild money spending that is, and has been going on for some time, we must admit that the greatest factor will be the women of the United States. A revival of the habit of saving in this country depends on the co-operation extended to the movement by the good housewife, who spends probably, if not quite, 90 per cent, of the money for operating the home. They are the real custodians of the household ex- pense account, and they are there- fore the ones on whom we must de- pend for progress as the arbiters of the Nation's destiny. The period since the close of the war has been one of fitful produc- tion and feverish consumption, in which there has been little accom- plished in creating machinery that will enforce the savings habit. This may be the reaction from a nervous condition induced by the war, but it cannot go on forever and forever, for if luxury absorbs the surplus of the country, we shortly shall lack the tools with which to produce the things to exchange for the luxuries, and then there will be an end of luxuries and everything else. The road of profligacy ends in a desert. High prices, inflation and all that have nothing to do with saving. It is just as important to save ten cents on a dollar as it is to save ten dollars out of a hundred dollars. The ratio is exactly the same, but it is more important than ever to get men and women who will save either sum and do it automatically and without a seem- ing recognition of any great loss of comfort on their part. The people of this country, while recognizing the ultimate good pur- poses of the propaganda put be- hind "Thrift" are a little tired of ordinary Thrift talk. Perhaps they ought not to be, but the fact re- mains that they are. The under- lying reason is that Thrift has been taught as a deprivation of comfort and as a painful limitation of con- sumption. In other words, we have always been taught that thrift is a provision for the future, and that it has comparatively little to do with the present, except in the way of denial. I take it that this is not only an unwholesome notion of thrift, but also an intrinsically vicious and anti-social view. "Save till it hurts" illustrates this. Real thrift is not, in my judgment, based upon self-denial, but upon wise spending; upon getting one's moneys worth; upon the exercising of a discriminating judgment, so ordering one's affairs that there will be a margin between income and outgo; that this margin will be returned for the uses of society so that he who is thrifty will not only augument his income from his own handiwork, but also will, through the affording of more facilities to society, make more potent his handiwork efforts. This is the positive as contrasted with the negative thought of thrift. It is the social as opposed to the per- 43 THE BUYER'S MARKET sonal laying-up-for-a-rainy-day no- tion. When we come to think of thrift as an enlargement of one's capacity, rather than as a limitation of one's consumption, then bursts on us the bigger meaning of thrift. It then becomes not only a good thing, but a way of living that im- peratively must be sold and with as much ardor as any commodity ever was sold. If the foundation of our present society rests upon thrift, and it does, we must then practice thrift in a practical way, and by so doing promote the fundamentals in our social structure and our business structure as well. To increase production the ne- cessity of the hour requires an addition of more capital to industry. Nearly every corporation is asking for more money, but the man who had the money to invest last year doesn't seem to have it to-day. The man who had a large sur- plus no longer has that surplus, nor have the banks the same sur- plus to loan now that they had a year ago or two years ago. There- fore, we can increase production only as we relatively curb our needs or increase the loanable capital through the channels of practical thrift, our future is assured only as we can do both. The man with the money to-day is the man who works for wages; it is he who re- ceives anywhere from sixty to seventy-five per cent, of the total income of the country. It there- fore follows that if we do not have a large and continuously growing investment in industry, production will grow relatively smaller. There is the point. The economical value of thrift is to be sold and not only well sold, but kept sold. The wage earner is the consumer and the capitalist of the future. The idea that prop- erty is something to desire and not something to destroy has to be demonstrated by affording the la- boring class a chance to own prop- erty. How is this man with his savings going to be induced to con- tinue to save and to get into indus- try as a capitalist ? He has to come in of his own free will. He doesn't want to be forced in; he doesn't want to be told that he is not thrifty, even though he is not. In fact, he doesn't like to be per- suaded or over-persuaded, but the inducement should always be where it is available, and when it is auto- matically available. I do not mean by this that you should increase a man's wages and then arbitrarily confiscate the increase in order that the face of thrift may be bright and shiny. If we are to have general thrift, it is the part of the employer to give whole soul encouragement through the various mediums that are now provided for profit sharing. The savings bank in one channel that has proven itself worthy of its right to exist and is to-day a volun- tary depository for thousands and millions of dollars of the wage earners' funds. The profit sharing which is done by an employer with his employes is another avenue that is becoming practical as it is correctly under- stood and applied. The co-opera- tive profit sharing or discounts as given by merchants to their cus- tomers is another principle that has long been established and more largely developed among foreign tradespeople than in America. It is, however, growing rapidly in the United States of America, where the understanding of thrift is coming more and more to mean not only a sharing of profits, but the conducting of trade on a cash basis. 44 THE BUYER'S MARKET For nearly twenty-five years the greatest principle of thrift, namely, of producing thrift automatically by those who have money to spend, has been clearly and successfully demonstrated by those merchants who have used a system of discount for cash trade, in the fo^m of a trading stamp. The Sperry & Hutchinson Company's discount service, in the form of the "S.&H." Green Trading Stamp, is known to the millions of housewives from coast to coast. The trading stamp book in the housewife's hands is almost as synonymous of thrift as the pass book of the savings bank. Yet neither are forced upon you or labeled in type as "Thrift." The one represents the savings by paying cash on what she is obliged to expend for the household living expenses; the other represents the surplus that she has after paying her bills, which she desposits in the savings bank to draw interest. The ever-present feminine touch has built the savings bank and is building the trading stamp into a practical demonstration of thrift which is voluntary and almost automatic. The "Cash and Carry" scheme is not in this class. It fails for that reason. The lady with her market basket doesn't get anything off for cash, that can be visualized. She doubts the reduced price and it is not in a tangible form so that she can see any increase in her bank account or any reduction in her expense account. She does not even get a premium that adds to her comfort and happiness. She, above all others, has been taught to use service and to appreciate serv- ice, and when service is removed, you discourage her in her efforts and are tearing down a most useful structure instead of building one. Those who are using and rendering service believe, I am sure in what Robert Louis Stevenson has said, "While we live we serve," and the women of the land, perhaps more than anybody else, are the people who practice and are the exponents of this thought. A discount service for cash trade, practiced by the thirty thousand merchants of the United States using the "S.&H." system of serv- ice, has distributed in standard merchandise or cash, among the people, in value over sixty millions of dollars during its twenty-five years of existence. Is there any- thing in practical thrift; auto- matic thrift; thrift in principle, without the word "thrift" being continually thrust before you, that equals for the use of the merchant the service The Sperry & Hutchin- son Company are able to render you through its organized co-opera- tive discount system? I am sure an impartial analysis by economists, by trade experts, and by practical merchants who have added this feature to their business will con- firm my conclusion that there is nothing better or equal to it, and that it is the principle that should, and will, become more practical and more popular as our economical problems are more fully understood and we are called upon to adopt practical thrift. 45 Multigraphing and Addressing Department. A Corner in the Mailing and Filing Department. 46 VOLUME VERSUS NET PROFITS EVERY experienced merchant realizes "volume' expresses the amount of business done a in given time against which a given expense or fixed operating charge is made before there is such a thing as "Net Profits" Any in- crease in volume each year is looked upon with favor as it means the public in the community you serve buys more from you. This sometimes creates a false condi- tion in your mind as to the net results which stare you in the face at the close of the year when in- ventories are taken, books closed, and balances struck. This small and highly uncertain factor decides the very existence of your business and measures your executive man- agement accurately. There are records galore of business failures, but if "causes" and not "effects" were made public it would be answered nine times out of ten by the failure to show "Net profits." This single item, therefore, stands out above everything else. It de- termines not only the earning power of your capital, but its se- curity, and it marks your judgment and ability as a successful business man. All of the above is important in view of the changes now taking place. Every one knows how easy it is to sell at a profit on a "bull market" when the demand is greater each day than you can get your goods to supply, and when even old stock can be marked up and sold at a profit bordering on profiteering a profit that will cover unusual expenditures, waste and extravagance. The task comes as "deflation" takes place and the market slides back to normal. Your executive must then make profits under a different method of operating and often at the expense of "Volume." The success of Sales and Advertising Campaigns used in the one case do not always fit the other ex- treme; if you continue them on the same scale with a drop in volume your ratio of expense in- creases and your ratio of net profits decreases. Let us take an an illustration a stock of merchandise representing an investment of $100,000. You turned over your stock three times in a year, or have sales of $300,000 a year at a gross profit of 33 1-3%, or $100,000. Your comparative operating expenses would be about as follows : Rent Int. 6% Taxes and Ins Labor 1917 ....$10,000 6,000 6,000 . . . 25,000 1920 $15,000 7,000 10,000 35,000 Overhead Sales & Adv 15,000 .... 15,000 20,000 20,000 Total . .$77,000 $107,000 If the $100,000 in stock on hand in 1917 invoices to-day $50,000 more, you made $43,000 in 1920 against $23,000 in 1917. This is a rough illustration, but is an ex- ample that visualizes what has occurred in three years. The large profits, if any, the last two years have been made possible through scarcity of merchandise, and this 47 VOLUME VERSUS NET PROFITS has enabled the turnover of all stocks at a very profitable figure. But this condition is being or is about to be reversed. Every one talks, hopes, thinks and knows it will come knows that the peak has been reached that in some lines a break in factory prices is already in evidence. The execu- tive management of every store is therefore to-day face to face with a new situation, and, may I say, a more difficult one? His volume is up his operating expenses are 40% to 50% up, and his net profits are already diminishing. As the buying power of his customers shrinks so will volume shrink; unless he can shrink operating expenses accordingly his net will shrink; as net shrinks his capital earns less and his credit line drops. Sales and advertising campaigns planned to fit last year's expense account and last year's merchan- dising conditions must be revised and the amount reduced propor- tionately at least. Executive man- agement will scrutinize all expenses closer, but with the strain of hold- ing up volume will naturally sup- port their sales, promotion and advertising departments. The analysis of your $20,000 adver- tising and sales promotion ex- penditure probably includes $5,000 possible $6,000 for the "S.&H." Stamp service, as this represents about 2J^% on 70% of your sales, or less than 2% on your total sales. Your further analysis leads you to conclude this expenditure cannot be reduced but should be increased because it is the only expenditure made on aclual sales money in hand before stamps are given. This form of sales promotion is backed by a stamp-giving and stamp-collecting community that appreciates and has for years enjoyed this co-operative profit sharing and likes it. If advertising is an educational force, a declara- tion of principle and a breeder of public confidence, (and it is so re- garded,) the co-operative profit sharing between merchant and customer is all this plus a trade builder and a teacher of Thrift. There is really but one market your own community. There are several competitors for the trade of this community besides the mail- order houses. The study of con- ditions by the executive manage- ment will, I think, cause him to hesitate about reducing his ad- vertising, promotion and sales ex- penses and lead him to use more willing and more generously his stamp service. The profit on each dollar spent here is actual and present business as well as new business is legitimately promoted and held at a minimum of cost. Every manager is certainly facing the dual responsibility of main- taining his volume and net profits and while all must expect a drop he will suffer least who does the best by his customers. The differ- ence from now on will not be so much the ability to get the mer- chandise but in the methods used to sell the same and the service rendered. 48 HIGH LEVEL OF PRICES WHAT is the cause of the continuance of the high level of prices, and is this high level justifiable?" These are pertinent and insistent questions in which you, as a merchant, are par- ticularly concerned. It appears to me that in order to clearly under- stand the present rise of prices there are one or two basic facts or underlying principles that must be kept in mind; namely, that the price of practically every com- modity depends upon the cost of labor and raw material entering into its production and the cost of distribution. By labor we mean EVERY HUMAN EFFORT EN- TERING INTO THE PRODUC- TION whether hand work or brain work. If the price of labor rises, the price of the commodity pro- duced by that labor must rise too. Only one thing can prevent a rise of price with a rise of labor cost that is additional produc- tion. To illustrate; if a man is paid $3.00 a day for making a pair of shoes and his wages are increased to $6.00 a day, the only thing that can prevent the cost of shoes advancing would be the production by that man of two pairs of shoes a day. The present situation is such that since 1915, as you well know, labor of every variety has been greatly increased but the volume of production has not increased. In fact production has fallen off, and where a man formerly made, let us say, one pair of shoes a day, he now makes one-half a pair or three-quarters of a pair of shoes. You can readily see that with rising labor costs and reduced production the cost of shoes would go up by leaps and bounds. Fundamentally, this is what has driven the cost of everything sky high in the last few years. This affects all material, both finished and raw, which we buy. The first cost is that of raw materials. Here is a list of a few articles and the comparison of the cost of 1915 and 1920 as of July 1st. 1915 1020 Percent- age of Tin, per pound. ...$ .327 $ .485 48%, Tallow, per pound .07 .14 100%, Rosin 025 .092 268%, Coal, per ton. . . . 5.38 10.26 90% ; Boxes 1 .28 3.50 123% Paper boxes 6 . 08 16 . 03 163% Bottles 1 1 . 60 28 . 20 143% Nickel shaving stick boxes. ... 3.21 5.28 64% The raw material listed above and prices are furnished us by Colgate & Company. The next charge against gross is freight and shipping cost. In 1915 these were $1.76 per hundred and for the quantity shipped to-day the cost is $4.50, an increase of 156%. To this must be added the recent additional freight increase granted of 40 to 45%. Selling expenses have likewise increased proportionately, includ- ing all forms of newspaper and magazine advertising. There has also been a great increase in taxes; increase in the price of money to finance growth and expansion, and increases in the cost of nearly every 49 HIGH LEVEL OF PRICES type of service and commodity needed for the maintenance of any business organization. A study of these examples shows that the average rate of increase has been up-to-date around 120%. The question naturally arises, why should not the service rendered by The Sperry & Hutchinson Company be increased in propor- tion to all other lines of service and in keeping with the increase in labor and raw materials. The facts are that we have been in business twenty-four years and during the first ten years of the business prices for our service were around four and five percent. During the ten years prior to 1915 the tendency of all business was to increase the volume and reduce the cost, and we were one of those that showed a very great increase in our volume and a very great decrease in our cost to our mer- chants. For ten years the price of our service has been practically normal. Merchants who have used our service, while under con- tract, have been able to renew their contracts, generally speak- ing, at the former prices. We have been able to do this by keep- ing down our operating expenses first; second, by short cuts and rigid economy; third, by increasing the volume of our business and fourth, by keeping our range of premiums as to variety and quan- tity even better than before, ad- mitting, however, that we have had to reduce the quality of the one book article. In doing this we have, wherever we could, kept the same article in stock, but naturally at an increased value. At no time, however, has the value placed upon our merchandise been out of harmony or higher than those prices charged by the retail merchant whom we were serving. Where we raised prices we did so rather than substitute cheaper and less desirable articles and we have found that the public generally understood that we were equally as justified in making our prices for our premiums correspond to the market price as was any other merchant. To-day The Sperry & Hutchin- son Company has $1,650,000.00 invested in merchandise distri- buted in our warehouses and among our several hundred stores for the purpose of giving the best service possible. The money required to carry this stock of merchandise is fifty to seventy-five percent greater than heretofore; yet we have not asked any more for our service. We invite every merchant that we meet to visit our redemption stations and compare the prices that we are getting with those of his own for similar articles; and we also invite every merchant to co-operate with our local or branch manager by showing us where we can improve our service in this re- spect. After you have made such an examination (and only then) can you judge for yourself whether we are endeavoring to maintain fair and honest prices and to give you and your clients the service par excellence. Merchants who are seeking to reduce stocks for cash; those of you who are seeking to share profits with your customers and hold and build a permanent clien- tele, are invited to give your best consideration to the discount serv- ice which we furnish in the form of "S.&H." Green Trading Stamps. Just remember that the use of a discount of this kind brings you in the cash, brings your customer back and does not operate as price 50 HIGH LEVEL OF PRICES cutting to injure your good name and demoralize trade in general. Every merchant to-day is con- sidering all the new economic con- ditions, new theories, and par- ticularly those advanced on the subject of advertising. Most of these theories seem to have in view an increase in the advertising expenditure. If you will analyze the experience of merchants who have steadily used our form of service you will discover they have had less trouble in holding their trade and at less expense than those using other methods. If you ask this question, "What is the smallest expenditure which will put my proposition across?" we will answer that the discount service of The Sperry & Hutchin- son Company is the least expensive and most practical service of this kind that you can buy. It is a service that is continuous. It is practical because it is only given to those who actually buy and pay cash. It promotes good will. It builds trade and it brings the customer to your store day after day. To condemn or let up on an advertising expenditure of this kind is practically saying that you can sell your merchandise without effort. You know and everybody knows that this is impossible. Sales effort cannot be suspended at any time and particularly at this time when the appetite of the buy- ing public is not as keen as it was and is likely to be reduced rather than increased as conditions change. There is a superstition, or some- thing akin to it, that supports the idea that appropriations for ad- vertising should increase in ratio to sales. Logically this expense should be in an inverse ratio to sales, for the maximum expendi- ture for advertising is needed when sales are smallest and distribution is weakest. We are not advertis- ing in the sense that you buy space in the newspapers or magazines. The "S.&H." discount service has no relation to expenditure of this kind, for, as a matter of fact, it is a true discount paid to the customer in the form of a Trading Stamp, based on his or her purchases, and increases in expense only as sales increase and decrease as sales diminish. From the day you start using our service in your store the logic of the case can be ascertained by the exercise of reason and ordinary common sense, and the results can be figured out at the close of busi- ness each day or each week or each month. What you are really up against is a desire for more business (volume) or the holding of the present volume, we will say. Whether you can do this or not will depend upon your ability to furnish the proper service to the consuming public in your com- munity and keep the expense of the same within reason and not absorb all your profits. You may be a good salesman to-day, but you will need to be a better salesman to-morrow and still better next week, next month and next year. This is why the "S.&H." Service lives and grows whether prices are high or low. 51 SELLING THE problem of distribution is the problem of selling. The merchant in the retail trade is the big agency of service. He serves the manufacturer and jobber as well as the consumer. He makes more sales and the last one. His position is one of com- petition with other merchants sell- ing similar lines and a necessity of distributing enough merchandise in his own community at a profit to justify his existence. Yet in this essentially great and wonderful service ninety percent of busi- nesses fail, according to the mer- cantile agencies. Sixty percent was the actual business death rate in a thriving Western city. Actual figures were analyzed on 4,369 concerns entering business during the thirty years ending in 1916. An analysis of business failure statistics compiled by Bradstreet's showed that 82.5 percent of failures are due to shortcomings of personnel or faults of manage- ment in some form or other. The high business mortality is largely because those conducting business do not know what they are doing. They proceed to hazard their investment, their good-will and their funds on the basis of guess, hope and enthusiasm. They fail because they haven't learned the art of selling. Business management of this sort might aptly be termed Ouija Board Management. The Ouija Board sometimes gets things right but it is not reliable. It does not base its conclusions on facts and reason. Business men must have facts upon which to base their de- cisions for procedure. Hunches work sometimes but, like the Ouija Board, they cannot be depended upon. The owner of a business may know that his capital turnover is two or three times a year, yet he feels that somehow he is not getting maximum use from his capital. He feels that he should have a turnover of four or five times a year but he has not the necessary knowledge to enable him to determine where his capital is being tied up. From now on merchants will be pressed for credit and you will grant it nine times out of ten be- cause you make a sale and hold a customer. Unless you make it an object for the customer to pay cash many merchants will find capital and borrowed money at high rates tied up in "Accounts Receivable." It is right here that the Sperry Service can be used with profit. Money at 6% on a turn- over of three times a year is 18% when credit is granted. If a dis- count service for cash trade costs the merchant 2^% or even 3% he will have a nice profit on his capital by using "S.&H." Service. He will borrow less, have a better bank balance and avoid bank- ruptcy. He will likewise hold trade and insure additional sales. This means turnover, fresh stock and more profits. Supposing your net profit is 5% on each sale. You turn your stock twice a year and SELLING make 10% three times a year and make 15% four times a year and make 20% less whatever increase there may be in your overhead. To do this and extend credit spells increased capital investment dangerous short time borrowing, the cost of which is several times the cost of our service. These facts are easily verified. For this reason the principle of cash trade has had the approval of Trade Commissions, Chambers of Com- merce and Merchants Associations generally. Trading stamps used as a discount for cash trade cannot therefore be wrong. It is not a tax on business that should be dis- couraged but from every point profit to the merchant using them of holding and building trade, of teaching people to buy for cash and of rewarding them and pro- moting thrift, they have their place in trade. "The birth of science was the death of superstition," Huxley. Substitute facts for ap- pearance and demonstrations for impressions. Study the "Sperry" Discount Service as used by many of the best merchants for over 24 years, live close to the problem of "selling" as I have. Take notice of the growth everywhere of the idea of co-operation profit-sharing co-operative societies and watch the trading stamp service of the "S.&H." Co. grow and merchants using it grow with it. It is eco- nomically, ethically and scien- tifically a selling help a service first developed and organized by Mr. T. A. Sperry deceased, reor- ganized by me to fit the times and operated by men of integrity in every department. As you try to analyze your selling problem remember I want to help you I know I can. 53 CASH TRADE MR. MERCHANT, how many families in the radius from which you draw trade pay cash for their merchandise? You cannot answer you can only answer as to your own sales and you may judge by that it is about 50%. How much of this 50% cash trade do you get? You of course wish you were getting it all but of course you cannot and do not in actual experience get it all. You have competition and always will have; if not competition at home it is in a nearby town or with the mail order houses, and you are therefore put on the defensive from the day you start in business as to means and methods which you will apply to secure as much as possible of the trade in your com- munity and especially the cash trade, which is always the most desirable. In this connection I want to say there is no plan in operation to-day (other than the "S.&H." Green Stamp) that enables the retail merchant to say that he controls or owns the cash trade that comes into any store, for the reason that cash trade is a free lance and spends its money where it can get the most for it. Cash trade is therefore a proposition that is here to-day and there to-morrow unless the dealer has a tie that binds between himself and the customers. It is just here that the co-operative discount sys- tem of The Sperry & Hutchinson Company becomes co-operative and is the "tie that binds." You can and do insure your life and your health and you insure your propery against burglary, theft, etc. Some merchants pay an indemnity company to have their accounts insured, but unless you have used the "S.&H." Green Stamp you have not done the most you can to insure the good-will of your customers. I have had many merchants tell me during the six years I have been at the head of this business that The Sperry & Hutchinson Company Discount Service is the cheapest and best in- surance they use that insures them of good-will and cash trade. I quote from a recent letter from one of our merchants, who says: "The Stamps are given solely as a discount which every one is entitled to who pays cash. The saving of "S.&H." Green Stamps in this community of a hundred thousand people is not beneath the dignity of anyone. We all encourage and nearly all of us practice practical economy, and in this respect "S.&H." Green Stamps are the greatest lesson in saving and practical thrift that can be put into practice. From 75% to 80% of our trade ask for them." I might quote from letters re- ceived from many other merchants from Portland, Me., to Portland, Ore., and I might quote from the decisions of Courts holding our system lawful, ethical and bene- ficial to all merchants using same. Your time is too valuable to go over the many decisions we have ob- tained; one will suffice, namely, CASH TRADE the decision of the Supreme Court of Montana in the State of Mon- tana versus Lutey Brothers and The Sperry & Hutchinson Com- pany. The Court quotes from Webster's and other dictionaries the definition of the words "bonus" and "premium" and says: "Does the furnishing of Trad- ing Stamps as shown in the case before us constitute the giving of a premium or bonus within the meaning of the statute ? The transaction involves no element of chance, uncertainty or con- tingency in fact it amounts to a specific deduction for a cash purchase a percentage or dis- count and does not fall within the condemnation of the statute." Here is the testimony of a mer- chant on the value of the Stamp in his store as a "tie that binds" himself to as much of the cash trade in his community as it is possible for him to get, and here is the decision of a State Supreme Court on our system being a "Dis- count for Cash Trade." To-day, from every source comes the story of the drop in prices, which spells drop in volume and probably drop in profits. Query: What should the merchant do that is beneficial to his trade and himself alike to offset this? I maintain that the Sperry & Hutchinson profit sharing service which is well organ- ized, already working in over 1,800 cities in the United States, and which is national in its scope and familiar to many millions of the buying public is something that should not be overlooked and can be used by you to your advantage. We have the country organized by districts, zones and branches, and a representative from any one of these centers will call upon you, discuss your problem with you and explain to you the use of our system in your store and how it can be used to benefit you. When once established, they are always on the job to see that the service sold you is rendered. What more could I promise you? If not already one of our merchants are you willing to give us an opportunity to show you results in your store?" PUBLIC OPINION THE greatest force with which every one must contend is "what will the public think or say?" The business of The Sperry & Hutchinson Company has been in the lime light for twenty- four years. It has during all that period done its work well; consist- ently and honestly sold and re- deemed the "S.&H." Green Trad- ing Stamps. In doing this it has just as consistently and honestly defended its business against other companies organized to compete with us and some merchants or- ganized to make us trouble largely because we were the "Silent Salesman" in the store of his com- petitor. The opinion of these peo- ple is trade opinion, not public opinion in its largest and best sense. Out of a public of one hundred and ten million people, twenty-five mil- lion, let us say, are the earning power and do the buying for all. At least ten million of these people are to-day saving stamps and cou- pons and therefore giving their CASH TRADE to the merchants using this form of discount. So many times do merchants make the mistake of allowing prejudice and adherence to old ideas and customs operate against their progress that I am going to publish by consent two letters recently written by two large department store owners in answer to an inquiry from a third department store about to con- tract with us. The replies were the honest expression of honest men as I have come to know them personally and watch their business grow. The questions they answer are practical and to the point with every merchant and are ex parte in that they did not originate or come in any way to our attention before they were written in No- vember. I accept them as a Thanksgiving blessing and pub- licly record my appreciation. Spokane, Wash., Nov. 3, 1920. My dear Mr. - Replying to your letter of Octo- ber 2,5th, referring to the use of the Sperry & Hutchinson Trading Stamps as an advertising proposi- tion, what we say to you we say from our own viewpoint and speak frankly, and should we not make our answer clear will be more than pleased to have you make a second request asking for further state- ments at any time. The writer took occasion to travel five thousand miles to personally visit concerns in this line of business who were using the Sperry & Hut- chinson stamp. After fully inves- tigating the results obtained by these concerns, in Portland, Ore- gon; Seattle, Washington; St. Paul, Minneapolis; Milwaukee, Wise.; Chicago, 111.; Hammond, Ind.; St. Louis and Cleveland, we were con- vinced that the system had great value. Hereupon we signed a con- tract covering a period of ten years. Having established confidence in the plan and believing in it myself, I took occasion to introduce the idea to all of our salespeople in the store, the department men, buyers, managers and advertising man, 56 PUBLIC OPINION and convinced them to a 100% that the plan was good. We, there- fore, have had no exception in the store to the use of the stamp. Should you decide to use the stamp yourself, first be heartily and thoroughly convinced that it is a square deal to your customer. Be- lieving this then, teach it to your organization heartily and thor- oughly, taking the required amount of time necessary before introduc- ing it to your trade. We have found the result entirely satisfac- tory. We have found the company en- tirely reliable from Mr. Caldwell, the president, down to the least employe. We find their organi- zation efficient, willing, accommo- dating in the extreme. The com- pany has done as much as they agreed to do for us, and even more. In our state the cash redemption is used exclusively. In our inves- tigation we found about as many in favor of premium redemption as cash. However, we very much pre- fer the cash redemption as far as we are concerned personally. We might say also that we can- not advertise the stamps in the newspapers of our city. By the following we will en- deavor to answer your questions in order as asked. First We think one and one-half UH%) is a s low as it would run, judging by our own experience. We established Wednesday as Double Stamp Day, and never de- viate from it. We never give double stamps on any other occa- sion. Our Wednesday business has grown almost equal to our Saturday business. Second We feel that the use of the stamp would increase your ad- vertising appropriation unless the volume of business should increase sufficiently to overcome this. After we had established the stamp ad- vertising we discontinued the morn- ing paper, with no bad effect that we know of. Third We think that the cash business would increase, but we do not believe that the so-called high brow trade would be in any manner repelled. In fact, our experience has been the opposite. We have never done any credit business, however. Fourth We believe you should use the stamps systematically, never deviate to exploit some par- ticular line of goods by extra stamp inducement. Although, conditions in your city surrounding you would have something to do with deciding this policy. We are very particular to have the people take the stamps on the day the purchase is made. We al- ways request the salespeople to hand a duplicate sales check to the customer, saying This is good for the discount stamps, or premium stamps, as the case may be. Fifth With us the stamp feature does not lose its advertising value. In fact, it is accumulative, and if properly handled, we believe will continue to be a drawing power for business. We very much prefer that 100% of our customers take the stamps. Sixth We cannot intelligently answer this question as local condi- tions surrounding a business would have so much to do with our de- cision. This you would have to decide for yourself. Laying aside local conditions, I would say yes. Seventh Knowing what we do about the stamps, we emphatically say you would be justified in plac- ing them in your business. Eighth Our customers are very eager to save these stamps as thereby 57 PUBLIC OPINION they do their own accounting, keep- ing a definite record of the amount of their purchase, upon which they are given 1.66%% discount on every dollar which they report by delivering a book filled with stamps. This money means money in their pocket, therefore, the interest. Ninth In our case it does not. The people think very well of the discount system which we use. By the use of these stamps they also appreciate the opportunity to re- deem other coupons and include them in their book. Business firms which do not use the stamp are the only source of opposition which we have, and with us we have entirely overcome this opposition. The disposition on the part of the people now to want discounts and special concessions strengthens the use of stamp advertising. (A) We would not advise dis- pensing with other forms of adver- tising right at the beginning. How- ever, very few firms discontinue their other forms of advertising. This form, as Mr. Davis, of Roths- child Co. of Chicago, said to me stamp advertising will do for your business what no other form of ad- vertising can do. Namely, to keep your regular customers constantly reminded of your store, making them willing to give you the first opportunity. If you fail to compete with other people in price of merchandise as- sortment, or pleasing service, the stamp will not sell your goods, but it will give you the first call in most cases. (B) We do not believe the nov- elty of the use of the stamp grad- ually wears off, except through the fault of the concern using them. If your salespeople are lukewarm and do not believe that the stamp is a fair, just and valuable as offer- ing a small discount to the cus- tomer, then chances are that they will fail to even mention the fact that the stamps can be had, in which case the customer may grow indifferent. Otherwise never. (C) The system is exceedingly popular with our customers and continues so. I have before me now sheets showing that stamps are given to customers of 85% of our gross sales, which is very gratifying to us. If we have failed to make clear any of these points, kindly let us know. Respectfully yours, PALACE STORE COMPANY, Per GEORGE A. PHILLIPS, President. Tacoma, Wash., Nov. 4, 1920. Dear Sir: We are in receipt of your letter of October 25th and shall endeavor to answer same in as careful, con- scientious and painstaking manner as possible, for we ourselves had exactly the same thought in mind and the same questions to propound some years ago, prior to the time that we adopted the policy of giving green trading stamps. We define the trading stamps by using the word "Green Trading Stamps," as we do not consider any other stamp in the market of any particular value other than ordinary discount, which, when offered, is a special in- ducement for cash without having any co-operative feature, for The Sperry & Hutchinson Company have a strong organization, and are up and doing all the time, increas- ing their clientele and by that means building up a co-operative system, which has a tendency to concentrate the public purchasing power with the stamp users. 58 PUBLIC OPINION (1) In answer to your question number one would you state that their figures total exactly with ours, after eight years of stamp giving, "and we are exceedingly liberal, in- sist on our salespeople encouraging the saving of stamps by offering the stamps to each customer." We have had one Jubilee Week in the last eight months, and our regular system of double stamps for three forenoons each week, together with an occasional double stamp induce- ment at one time or another, and yet 1;M>% covers the total cost. (2) Would state that we keep a record of competitive advertising, and we endeavor to make a portion of the stamp expense apply on our advertising appropriation, holding our ad down so that with the addi- tion of the stamp expense it will not run much out of proportion to that of our competitors, in propor- tion to our business with theirs. At the same time the purchase or expense connected with trading stamps must not always be con- strued as an expense. For in- stance, there are days when we offer trading stamps in lieu of price- cutting, and especially during the present time when merchandise is on a falling market; we find that the trading stamp, which is a weapon solely our own, "as we are the only Department Store in the city giving them," we have something to offer against our competitors, for in place of making deep cuts we offer the trading stamps as an inducement, so that under those circumstances they must not be considered an expense. (3) In answer to question three, which embodies two questions; one is, "Which part of your business would be most affected, cash or credit," and the other "Who are the stamps most popular with, everyday class or high-brows," would state that we give stamps on cash purchases only, or charge and C. O. D. purchases settled within ten days from date of pur- chase. Consequently, it has been a stimulant to our cash business, the side of our business which we are most anxious to increase, and stamps really helped us. In an- swer to your other question, we find that just as many among the high-brow are practicing economy as among the everyday people, and, in fact, to a greater extent. The trading stamp in our community is looked upon as a means of thrift and is encouraged by the better class of people. Of course, you realize that the encouragement of thrift has been aided very much during the war period, and the more educated the public have be- come along those lines, the more popular trading stamps have be- come, so that the fact of your put- ting in trading stamps, in our opin- ion, would not in any way be a re- flection on the cleanest, and most modern business institution. (4) In answering number four would say "yes." We have taken the stand that the public derive a double advantage by trading at our store; first, by receiving stand- ard merchandise at a price lower than our competitors are offering; secondly, receiving a cash discount in the shape of green trading stamps, and on several occasions we have used the stamps to stimu- late certain lines in our store. For instance, at this time of the year we shall issue a book with ten or twenty free stamps to each child accompanied by his or her parent or guardian, who makes a pur- chase for the child; we advocate the desirability of encouraging Young America to save, and at this season 59 PUBLIC OPINION of the year we help them to start a book for the purpose of cashing in and buying their Christmas pres- ent. Sometimes we use it as a means of encouraging the opening of a bank account by the young- ster. Of course, you realize that premiums are not permissible in the State of Washington, much to our regret; consequently stamp books are redeemed in cash. We say much to our regret, for the pre- mium parlor in our store was one of the greatest attractions we had / to offer, and it was a common thing for a customer to select some arti- cle, costing from one to ten books, and then start out to fill the books with the thought of this premium continually in mind. Again, these premiums got into a home, and it was an ever-permanent advertise- ment for the store that was giving green trading stamps. Our com- petitors, however, realizing the weapon which we had, succeeded in getting the legislature to enact leg- islation which put a stop to pre- miums, so that our books are re- deemed in cash, which works very well along the lines I have out- lined. (5) In answer to number five would say that the newness of sav- ing never wears out; the life of the stamp and its drawing power de- pends altogether on you, and the co-operation that you receive from the others in your community who are interested in giving stamps. Trading Stamps are just as popu- lar with us to-day as they were the first time we put them in; just as much of a stimulant to our busi- ness, with as much drawing power. (6) In answer to number six would state that if I were in your place and desiring to increase my volume of business, I can see no better method than I have out- lined, for, of course, I realize that every concern, no matter how large it is, is not alone willing, but anx- ious to increase its volume, for there is no such thing as standing still one must either go forward or backward consequently, my answer to number five practically covers number six. (7) My answer to number seven is that I presume, personally, I have been the hardest nut that the Sperry & Hutchinson people have ever had to crack in the way of inducing me, "as a store policy," to adopt Trading Stamps, and I want to tell you right now that had I known as much about them then, as I do now, I would have adopted the trading stamp several years before I did as the policy of our company. (8) In answer to number eight, interested saving stamp customers are just as anxious and hungry for them to-day as at any time, for, as I have stated, people who get the habit of thrift, in the way of saving trading stamps, look for their cash discount with just as much .expectancy and desire as you look for a 2% off 10 days, on your purchases. I know that as a con- cern we are just as much interested in our cash discounts to-day as we have been at any time in our his- tory, and the same really applies to stamp savers. (9) In answer to number nine would say "no, not at all"; we are looked upon to-day as live, shrewd, wide-awake merchants, using the most modern methods to increase our business, and while we were about sixth from the top of the lad- der, when we adopted trading stamps, would say that to-day we are making a desperate fight with two of our competitors for second place, and believe that our sails are 60 PUBLIC OPINION set more firmly to catch the favor- able winds that will land us there without question. The Sperry & Hutchinson peo- ple have proved to be very fair at all times, and have never yet failed to carry out any part of an agree- ment entered into. It is a co- operative business, and the success of the stamp users is their success; it could not be otherwise, conse- quently it is to their advantage to increase the stamp savers. The writer has tried to answer your questions as intelligently as possible. If there is anything that I have not fully covered, will be glad to answer, for I consider it along the lines of the ethics of busi- ness for one firm to be at perfect liberty to receive an unprejudiced and frank opinion from another, in a manner strictly confidential. Very truly yours, McCoRMACK BROS. DEPT. STORE, (Signed) JAMES McCoRMACK, President. I have often deplored the fact that I was not a merchant I could perhaps get closer to the merchant and his problem. The merchant likes to learn things from a mer- chant, especially one that grew from a small merchant to a leader in his community and has a suc- cessful record for making money. Department Store managers who are considering what they can do to stem the tide of a drop in vol- ume and net profits are here offered the experience of two of their brother merchants who have used the "S.&H." Stamp Service for some years. I will add my desire to meet you and persuade you, if possible, to duplicate their experi- ence in your own store, for, with all your prejudice, the "S.&.H." Green Stamp is willing to serve you in a manner so satisfactory that you too will be willing to write letters to your brother merchants creating a favorable opinion. CO-OPERATIVE CO-OPERATION WHEN manufacturer, mer- chant and consumer are all doing business at reasonable prices and at a reason- able profit, results are the best. This I think is what is meant by ''normal." Certainly it brings pro- duction, distribution and consump- tion into a condition where each may be said to function and restore harmony and stability of trade. To-day we are deflating from the dizzy heights of war prices, where the saying is that rich men have grown richer and the poor, if not poorer, are still poor. This saying, however, is never a good one to use. If this saying means any- thing, it means that the manu- facturer or merchant admits he is outclassed, outdistanced or out- played in trade by his compet- itor; for my analysis is that there is a degree of wealth but not a degree of poverty. In business the poor man is the man who has neither capital nor credit, and people so rated are very few in business. It is true the world over, that some have more of this world's goods than others, hence the necessity for the Credit Man, and therein lies the opportunity for demagogue, the propagandist, for the referendum, boards, commis- sions, socialistic doctrines, anar- chists, heresies, etc. Co-operation under these conditions sometimes becomes difficult and the agents of trade fail to function. It is these things that we are to-day trying to understand and regulate. To the trouble-maker everything in and about business to-day is suspicious. Anyone who says a good word for it is regarded as the paid tool of the interests; but on the other side are millions of busi- ness men, especially merchants, who are so firmly convinced of the value of their service and who are such ardent believers in the efficacy of the industrial order that to challenge them for it is like de- nouncing a man's religion. To some of these minds the mildest criticism is hotly rebuked as social- istic. Naturally, under such cir- cumstances, it is not easy to get at a quick remedy for our troubles or rise above the petty prejudices which bind us to one or the other point of view. Let us detach our- selves if we can from either side of this controversy, and in a truly sane moment, and possessed of independent mind we cannot help but be impressed by the con- tinuously daily miracle of the daily production, distribution and consumption of goods. One is sometimes led to suppose in the volume of criticism that telephone lines, railroads, coal mines, had ceased to function and to suppose that the commodities or service provided by these in- dustries as well as by the merchant had either become unattainable or had fallen off to such an extent as to no longer play any factor in our national life; while the facts are that all these things are, as a matter of fact, a service being sup- plied in larger quantities and to a larger number of people than ever CO-OPERATIVE CO-OPERATION before. Clothes, shoes, automo- biles, bread and even sugar are available and actually being con- sumed by more people than ever before. Failures, defeats and evils there are, but any group of us that is preoccupied with them naturally becomes blind to the basic ele- ments of success, because after all the supreme fact is that this great industrial machine, vast as it is and complicated as it is, no man could have ever conceived of from the outside. It has grown up and it does work. What I am emphasizing and what I maintain the facts justify is the miracle of continuous in- dustrial operation, for it is con- tinuous as viewed in the large, year after year and decade after decade. The wonder is that supply and demand do adjust themselves to the reasonable and general satisfaction of mankind. One of the conclusions, is, of course, that we are dealing not with a perfect instrument beyond the need of amendment or improve- ment, and the question is, how can business render service so as to re-establish itself in the con- fidence of mankind? How can it, asks the believer in innumerable revolutionary ideas, in view of the fact that business men are mere money grabbers working for profits ? This has given rise to the sug- gestion made by those who regard the present system of profit taking as pernicious that capital should be accumulated by the state or by an entire industry acting as a unit, thus doing away with private or individual profits. This socialistic idea that industry is somehow an automatic machine that goes of itself by the mere pressure of a button is contrary to the facts and has proven disastrous when ever it has been tried. The Equal- ity League in North Dakota is a recent example of the try-out and failure of this idea. You can write a scheme on paper to make either men or machines work on indefinitely purely as automatons, but no system can be taken and held rigidly to a certain line of endeavor and in that way made to supply human needs. Just as long as population increases and wants and desires of men grow, indus- trial processes will remain any- thing but constant and dependable. It is a wrong idea to really imagine that our industrial leaders are interested only in making profits. My own observation is that all manufacturers and all merchants who are the leaders to-day are concerned with the types of in- dustry they build up, with the kind of reputations they are able to construct, no less than the money they make out of it. Many people who sell out and retire from active affairs are still jealous of the good name and reputation of their former concern. I illustrate this by saying that Mr. William Jen- nings Bryan makes speeches and I write letters. He is jealous of his reputation for eloquent speech - making, I for the reputation of my articles. The business man's reputation must be built upon the good name of his business and upon his breadth of judgment as well as his generosity in the com- munity in which he lives. To-day there is a broader viewpoint among successful merchants everywhere and sensitiveness to the interests of the other fellow and the appre- ciation of the value of good- will as a business asset. The selfish motive is found to coincide with the profit motive, that is, certain policies such as one price, welfare 63 CO-OPERATIVE CO-OPERATION work, money back if not satisfied, profit sharing, etc., are all growing and being recognized by the pro- gressive people everywhere in the world interested in trade. The salesman tries to make more sales, and has a selfishness in so doing that is purely his own. Men will serve others as long as they know that in so doing they are serving first themselves; yet service to the community comes through their efforts to satisfy some of their desires. The one fact that stands out very clearly to us all is the importance of in- dividualism. This is what we must recognize in order to reform or get back to a normal basis. When I left my home this morn- ing, I said to myself, "One of the most expensive items in operating a large retail store is the time of the clerks taken up by customers in merely looking over the goods on sale." Much of this is neces- sary, of course, but a large amount of time could be saved if customers were always sure of an article being precisely as represented. The idea in simple language of course is to raise the standard to a point where the clerk will be trained to say, "Yes, it looks something like linen, but it is mostly cotton." The truth told in the store by the clerk to the con- sumer would establish confidence and help diminish the returned goods evil. I recently clipped out of various newspapers and magazines three advertisements, one of a chain of grocery stores, the second of a lumber company, and the third of a motor car manufacturer. The chain store was advertising in con- nection with its 80th anniversary, and the statement was made that the earnest desire of the concern is the same as that of its founder, "to serve the people of the city to the best of human ability within its chosen field . ' ' The lumber com- pany advertised that an industry is no stronger than its service to the people. The automobile com- pany headed its advertisement, "He profits most who covets profits least." The point here is that any in- dustrial enterprise can choose be- tween being a mere business and a business institution. Business can be started in a day, but a business institution should command the noblest endeavors of a lifetime. The most precious asset that can accrue to any business institution is the pleasant thoughts which people think about it, namely, that individualism or a spirit has been added to the body and mere business has become a business institution in the community. The Board of Directors of a large western department store recently passed a resolution out- lining the duties and functions of the different people in the estab- lishment and explained their own function as follows: "Our task is not to sweep floors, to wash windows, to keep books, to fill orders, to sell goods. That is the business of our employes. It is not enough if we be bosses on the job and mere task masters. We must constructively contribute to the symphony by supplying ideals, by devising processes, im- proving methods, inventing equip- ment, lending hand, heart and mind if we would earn that portion of the income called not 'wages' but 'profits.' ' A manufacturer recently stated to me that in his judgment "in- dustrial democracy" implies al- truism and not in one million years 64 CO-OPERATIVE CO-OPERA T I O N will altruism take the place of self-interest. Of course, that is not the question, and of course altruism will not take the place of self-interest, but it will develop in various ways just as self-interest will continue to develop. The two motives are instinctive or human and must grow and function to- gether. It is a recognition of these facts on which I believe co-operative co-operation must be built. Those who have shared profits with their customers and with their em- ployes do not go back to the old idea. The excellency of their good will and of their unity of strength is the sign that human nature is ready for considerable advances toward an organization of any industry and a plan that is not wholly without consideration for the individual. The personal or human equation shows itself in trade everywhere and it is this factor that merchants, who have for years used the "S.&H." system of giving discounts for cash trade or sharing profits with their cus- tomers, have appreciated. It is this tie that binds the human family together the spirit that lies deep down in human nature. It is this fact that is bringing us new accounts each year and which as a matter of service for any mer- chandising proposition cannot be surpassed as a part of a perma- nent policy of a progressive store that fits the times. Co-operation of nations won the war and only co-operation of nations will keep us out of war in the future. It is the big thought to-day applied to business that will solve our indus- trial problems one by one. If you have never tried it as a merchant the time has arrived for you to do so and we are organized and ready to serve you. Co-operate with your cash customers through the Sperry Discount Service. THE REASONS WHY! HERE is the answer for the existence of the Service supplied for twenty-five years to thousands of retail mer- chants by The Sperry & Hutchin- son Company. In parallel col- umns I give you a synopsis of what merchants say who have used the system and what his customer likewise says: MERCHANT "Volume counts. It may mean less gross profit, but prevents a reduction in net profits." "Your stamp service increases my cash trade." "Cash sales enable me to dis- count my bills and buy to greater advantage." "They reduce my bookkeeping expense." "They reduce credit and mini- mize my losses from slow or bad accounts." "They popularize my store and induce the customer to think of me first when in need of anything." "They attract trade and build up my good- will." "I realize a cash buyer is no- body's customer without some ex- tra inducement." "They represent dealer-consumer co-operation." "They are a great advertising medium. 75% of our trade ask for them." "I sell my goods as reasonably as my competitors and consider the S.&H. Service a profitable invest- ment, as my trade shows a yearly increase." "Helps me to move my stock quickly and profitably." "Although silent and small, they are salesmen that sell 'BIG.' ' "We give our customers stamps instead of having them ask for them. They go away smiling." "They increase business on the soundest basis sales for cash." "They are an effective medium for reaching all classes of buyers." "They have served the public since 1896 and are well known. The system is national." "My delivery costs are reduced when they buy all from me." "They make old customers regu- lar ones and make new customers feel I want their trade." "Stamps bring repeat orders." "They are not an expense. I get the cash sale before I give the discount. I share profits." "Stamps eliminate to a certain extent necessity for cut prices." "They are an inducement to trade with me that my competitor does not have." "Because I have observed they draw customers to my store past my neighbor's door." "Because they are backed by a Company financially strong and honorable in its dealings." "Stamps make my store 'busy' and that makes people talk." "Your service is much better than it used to be and I have no idea of giving them up. They are ethically correct." CUSTOMER "I trade for cash because I get a THE R E A S O N S WHY! discount, which brings me cash or standard merchandise." "I save stamps because they reduce household expenses and help to furnish the home." "They teach thrift 'a penny saved is a penny earned' to be consistently thrifty we must fore- go nothing, interest, discount, re- duced prices, stamps, etc." "They offer a real inducement in these days of H. C. of L. and help me get articles I could not otherwise afford." "They pay me 3% interest on what I spend. It is a way of saving without putting aside money." "It takes only a short time to fill a book." "I am purchasing the same thing at the same price, plus the stamps. With stamps I can get useful and ornamental articles without ad- ditional outlay of money." "Every day is bargain day when you trade and get stamps. Women like 'bargains.' ' "The saving is automatic and easy. I can redeem my book in almost any city." "They encourage thrift- the economic need of the times." "Many of the best merchants use them. They get all of my trade." "I want as much for my money as I can get, therefore I buy where they give stamps." "The articles I get are of good quality, satisfactory and useful." "It is as much pleasure to paste the stamps in my books as it is to see my bank account grow." "Other stamps have come and gone, but 'S.&H.' Stamps go on and on. My mother used to col- lect them." "The merchant receives a dis- count for cash, why shouldn't I?" "They are the same stamps used by merchants in other lines, and by trading there I get a substantial discount on all my purchases and fill my book quickly." "I get value plus value. Like a prohibition drink, I have no kick in me." "We pay the same price at Jno. Smith's for soap, etc., as at Brown's. Why not trade at Brown's and get my stamps, as well as the soap." "The merchant's co-operation appeals to me and I tell my friends." "I trade at drug stores, shoe stores, groceries and department stores that give stamps. On an expenditure of $1,000 I save $30." "It is an invisible yet a tangible saving." The merchant recognizes this is the age of salesmanship. The evidence is page after page of newspaper advertising. If the real function of advertising is to create a consumer desire to sell things then I have proven my case by the above testimonials of the virtue of the "S.&H." Service, the use of the Trading Stamp as a cash trade builder and to keep sales repeating. I know you can- not get along without the news- paper, but they do not and cannot insure you cash trade or a sale for your money spent. Trading Stamps given as a discount for cash trade do this and are neither a substitute for or in any way take their place. It is a different service, equally as effective, and as much appreciated by the cus- tomer. You should use both to get the best results. 67 THE "S.&H.' COMPANY'S DISCOUNT SERVICE THESE are times when busi- ness practices and even poli- cies are changing almost "over night." It is more essential than ever that the merchant who hopes to survive have consumer co-opera- tion, and not so much on a credit basis as on a cash basis. The mer- chant cannot forget his own selfish interest. He cannot if he would; otherwise his competitor gets him. Nor can the merchant overlook the fact that while quality and prices are always important factors to consumers there is a psychology that governs the affairs of human- ity en masse and that likewise gov- erns the affairs of the individual. The best advertising manager to- day is the one who can apply psy- chology to his advertising and draw trade. Frequently store service or location is not as good or the qual- ity of goods or prices no better, if as good, as his competitor, but his advts. have a "pulling power." They have an appeal that attracts, holds and draws, creates consumer desire, and for it every merchant willingly pays the price, 100% more than in 1915-16. The average merchant is not a good advertising writer. He lacks vision. He is practical, materialis- tic, sometimes without psychologi- cal thought or feeling. As a prac- tical merchant he has a knowledge from counting the cash at night of the value of cash trade, of con- sumer-co-operation, of a something to draw trade to his store that the other fellow does not have. It is here that the Trading Stamp can justify its usefulness. It is also practical. It is not issued until the purchase has been made and is paid for. The Trading Stamp is not and never was publicity advertising; it is now and always was a discount for cash trade. The Trading Stamp brings consumer-co-operation and cash trade. It organizes the buy- ers of your city centralizes their purchases where the discount is given, and this makes practical consumer-co-operation. It builds good-will and insures future sales because the buyer is getting with a filled stamp book something she can use. The Trading Stamp is the silent salesman that automat- ically ties up vision, psychology and practicability at a cost to the mer- chant so reasonable that even econ- omy stores can afford it. Please, Mr. Merchant, do not confuse the Trading Stamp with the coupon. They occupy two separate and distinct lines of pro- moting sales, serve each differently and are similar only in the matter of having a value to the consumer, which also varies. The coupon is of little value to the retail trade because it is a manufacturer's prop- osition. The Trading Stamp is of small use to the manufacturer and of much benefit to the retail trade that has used it now about twenty- five years. Neither are of use in promoting sales unless they are ad- vertised pushed by the merchant, 68 THE "S.&H." COMPANY'S DISCOUNT SERVICE and easily redeemed. The Sperry & Hutchinson Company is redeem- ing its stamps of late years at 95% of the total issue, which shows the buying public has not lost interest in the "S.&H." Stamp, and also proves high returns on- money in- vested in "S.&H." Stamp Service by merchants. Merchants cannot buy any other service and get in return 95% efficiency. I have from time to time listened to opin- ions against stamps. One was that they were going out of business. Quite the reverse is actually the truth. Certain stores, particularly in the east, could not renew their contracts at low prices; some dis- continued the service altogether; others who were giving stamps too freely and voiding their contract were cancelled. The stamp busi- ness so far as The Sperry & Hut- chinson Company is concerned was thus purged of its many evils and lifted to a new plane one of digni- fied service, with one price for all. It is sometimes said the most successful stores do not give stamps. This again is a statement wholly untrue. Here is a partial list of what I call successful department stores that use a stamp service: Rothschild & Company, Chicago, Illinois. The Boston Store, Milwaukee, Wisconsin. The Emporium, St. Paul, Minnesota. Olds, Wortman & King, Portland, Oregon. Houghton & Button Co., Boston, Massachu- setts. Hens & Kelly Company, Buffalo, New York. Adams, Flanigan Company, New York City. May Company, Cleveland, Ohio. Palace Department Store, Spokane, Wash- ington. McCormack Brothers, Tacoma, Washington. Fifth Street Store, Los Angeles, California. A. Hart & Co., San Jose, California. Levy Brothers, Stockton, California. Wurzburg Dept. Store, Grand Rapids, Mich. Elliott, Taylor, Woolfenden Co., Detroit, Mich. Kaufman & Baer Dept. Store, Pittsburgh, Pa. Litt Brothers, Philadelphia, Pennsylvania. Rorabaugh- Brown Co., Oklahoma City, Okla. Monnig Department Store, Fort Worth, Texas. John Diskon, Paterson, New Jersey. J. W. Knapp & Co., Lansing, Michigan. L. Dimond Dept. Store, Providence, R. 1. A. & P. Company, New York. Goldenberg & Company, Baltimore, Mary- land. Hagen & Wagner, Scranton, Pennsylvania. Zollnger, Harnard Co., Allentown, Pa. Leinbach & Company, York, Pennsylvania. Baer & Company, Lancaster, Pennsylvania. Klein Brothers, Lincoln, Nebraska. John Boesch & Company, Burlington, Iowa. A. Franchere & Co., Cedar Rapids, Iowa. Wieboldt & Company, Chicago, Illinois. Becker-Ryan & Co., Chicago, Illinois. Adams, Meldrum & Anderson Co., Buffalo, N. Y. H. A. Meldrum Co., Buffalo, New York. New England Furniture & Carpet Co., Min- neapolis, Minnesota. Timothy Department Store, Nashville, Tenn. Besides the above long-time users of stamps we do business with twenty-five thousand (25,000) pro- gressive, red-blooded, forward-look- ing merchants in many different lines in the United States, operating in some eighteen hundred different cities, and we are opening new towns every month. The "S.&H." Stamp Service is also appreciated by over ten million thrifty Ameri- can housewives. When properly used with full co-operation of the merchant, it always makes good. This is because the law of service is to all human relationships includ- ing commercial, industrial or pro- fessional, exactly what the law of gravity is to all material bodies fixed and unchangeable. The mer- chant who serves his customers best will always have the popular store and the leading trade; the mer- chant who uses the "S.&H." Com- pany's Service as a discount for cash trade adds to his service and gets the big end of the cash trade of his city. The "S.&H." Company stamps are a substantial discount THE "S.&H." COMPANY'S DISCOUNT SERVICE easily redeemed good anywhere tinue to stay. Why not give your in the United States, and appreci- trade a Discount as an appreciation ated by the well-to-do equally with of their loyalty and good- will. Why the wage-earning class. Both have not, when the "S.&H." Co.'s Serv- cash to spend, and this is the trade ice is a real asset and not an ex- our Discount Stamp Service will pense account? "S.&H." Trading- help you to get and to hold. De- Stamps are a salesmanship of a creased volume and decreased prof- very economic type, its are here already and will con- 70 WHAT ARE THE FACTS? |HE merchant using stamps in- variably replies to my ques- tion, "Is trade up to last year?" "No! About 10% less for March and 20% less for the first three months of this year." "How are your profits?" "Don't expect to make any money this year." The merchant not using stamps and who is a prospect replies his trade is equal to last year or better. The first merchant is doing business with me and tells me the truth. Why does the latter, who is suffer- ing from the same causes and can- not possibly be doing as well, at- tempt to deceive you and me? An increase of business this year is not possible, and an increase of profits from any month's operation that shows a lessened sales volume is a sort of business miracle. Only can any sales volume grow or any corn- field grow by expenditure in labor and material and now is the time for this investment. Every one admits sales income is dropping because of reduced prices first, and second because of a lim- ited demand. The people are no longer buying extravagantly. Ev- ery line of business is affected and declining in volume. Of course it requires a better organization to promote sales now than it did one year or two years ago. It also re- quires more courage to spend to meet hard times and competition and wait for returns. The abnor- mal conditions due to a great war made merchants happy and life easy so far as selling. It made liars out of those merchants who are tell- ing you and me that sales are up or that they are making as much money as ever. In both state- ments the reverse is true and the end is not in sight. In the pride of showing a great and wholesome level in both gross and net there can be but one way spend more, either in physical effort or adver- tising. On a recent trip through west coast cities I saw shirt sale after shirt sale, $10.00 and $12.00 shirts at prices two years ago offered at $2.98 and only small sales at that price. In that line neither adver- tising nor cut prices moved the merchandise. It is quite common to hear merchants when conducting a post-mortem express a conviction that prices must again advance materially if prosperity is to re- turn, yet they admit the public is not buying because it knows prices are high and will yet come down. In my opinion the merchant is wrong and the public is right. Wait and watch, yet what is better adjust yourself to the new condi- tion, lower prices are yet to go lower, and a slow turnover because of the public's lack of confidence on a declining market. Stop mak- ing your comparisons with 1920, that year has passed never to re- turn. It was abnormal. Try com- parisons with 1916, it is more helpful and you will not be so dis- couraged. Your sales will at least compare more favorably though your expense account may yet be excessive and will be until rents, interest, transportation and labor 71 WHAT ARE 'THE FACTS? are adjusted and in harmony with wheat, corn, cotton, cattle, copper, etc. If you feel or think your business is peculiar or different and that you are to be the exception, you are mistaken; you will not advertise or buy "S.&H." Service or spend any money because you pay other peo- ple money you think you can save. Try the reverse of this policy add to your service the "S.&H." dis- count for cash trade and succeed. The "S.&H." Green Stamp Service produces turnover and increases your profits on the smallest capital. It checks competition, it holds and builds good-will, it is not an expense but an asset. The stamp does not leave your hands until you have made a sale. What advertising is more direct more effective? Sales volume and Green Trading Stamps are synonymous. HOW TO USE "S.&H." GREEN STAMPS "S.&H." Green Trading Stamp is one and only one part of our Discount Service. The "GREEN TRADING STAMP" is the token of value. It has been this from its birth, twenty- five years ago. The Discount Serv- ice, of which this Stamp is a part, is a contract service covering several things including the stamp used by the merchant who issues the same to his over-the-counter cash trade, one Stamp being given with each ten cent purchase. This Green Trading Stamp Serv- ice has many imitators, yet for twenty-five years the "S.&H." Green Trading Stamp has had the lead and does business to-day in thirty-five states of the union and stands for the same value in its re- lation to the dollar in trade that it has always done. The issue by the Company of the stamp in convenient form with books in which they shall be pasted is the first step in the Service; the forming of an organization of mer- chants in any of our two thousand cities in which we do business, who will use this Service, is the second step in the Service that is rendered ; and the redemption of the Stamps when issued by these merchants and collected in filled books and presented to us is the third step in the Service performed by The Sperry & Hutchinson Company. This redemption of these Stamps is of the highest importance to the merchants, because they are issued by him to his trade and are re- deemed by us either in cash or merchandise. The Sperry & Hut- chinson Company, therefore, has to furnish the cash or buy the mer- chandise, which is the same thing, and maintain a redemption station, pay for store space, clerks, cartage, insurance, taxes, etc. There is also a minor service rendered which sometimes becomes a major service insofar as the mer- chant is concerned. The Sperry & Hutchinson Company furnishes either advertising or canvassing in such towns where they have an or- ganization, and at their own ex- pense, realizing that to co-operate and bring together the merchant and the customer can only be done by giving satisfaction to both, which builds good- will for the mer- chant as well as for the S. &. H. Company. The satisfied customer in our store returns to the merchant from whom she received stamps, continues to pay him cash for the purpose of obtaining a discount, and does this day in and day out. Not only does she fill one book, but many books, for we have frequently had ten or twenty books presented at one time by one person for re- demption. This is the "tie that binds" not for one day, but for every day a customer has expendi- tures to make and cash with which to trade. B.C. Forbes, financier and editor of world-wide reputation, says, ''The problem of raising capital is to become more difficult instead of less difficult. The old world is hungry for capital. Money is high to-day and will stay high." Mer- 73 HOW TO USE "S.&H." GREEN TRADING STAMPS chants who are doing business on a credit basis and are forced to bor- row money realize the truth of Mr. Forbes' statement. Cash on hand not only saves book accounts and bookkeeping, loss from credits, and borrowing at your bank when money is high, but helps keep retail trade on a cash basis. It has been adopted by many merchants and found to be most advantageous as well as most satisfactory in the education of the consumer. Naturally enough, the success of a Stamp Service in any store has to do with the creation of "con- sumer desire" for the discount such service represents. In a company that has had business in over two thousand cities of the United States for twenty-five years, "consumer desire" is pretty well established, and the "S.&H." Green Trading Stamp is known in nearly every household from Coast to Coast. Yet it should always be borne in mind by a merchant contemplating the use of our Stamp Service that he is the one who really creates the consumer desire. He creates it for any service in any line free and prompt delivery service, for in- stance, has its value. It is paid for by the merchant and given to the person who trades at his store. That it is appreciated by the public is proven by the fact that all cam- paigns instituted for the purpose of discontinuing the delivery service have failed. That the "S.&H." Green Trading Stamp is appreci- ated is proven by the fact that 95% of the stamps issued are to-day re- deemed, and in some years the per- centage is even higher. Redemp- tions would not take place if the consuming public did not have a desire for this service, was not will- ing to accumulate the stamps and take them to one of the many re- demption stations that the S.&H. Company maintain for final con- version. I have watched these re- demptions in many stores, many times. I have seen a line similar to the line before a paying teller's window in a bank. I have seen runs where a thousand or more customers were fearful they were not going to get the value of their book before the Company closed operations in that particular city. All of this shows "CONSUMER DESIRE," which is, it seems to me, the one thing that the merchant of to-day is seeking and is willing to pay for. At the price at which the "S.&H." Service is sold, there is nothing more effective, in my judgment, that is not prohibitive as to cost. Taking the figures of many merchants, I find in many in- stances it costs them more for store window displays than it does for their stamp service. This leads me to say something important to every merchant using or contemplating the use of the "S.&H." Service. When you have contracted for our Service, do not hide your light under a bushel. You desire to have the full benefits of it. You cannot possibly get these benefits unless you give the stamps freely to your customers and create, yourself, the "CON- SUMER DESIRE" that will bring not only good-will because of the discount on what has been pur- chased, but continue to bring trade to your store. The merchant who gives Stamps to his customers whether they ask for them or not, versus the merchant who gives them only when asked, spells the difference between the one who succeeds and the one who fails in the use of this Service. After serving the merchants' trade for twenty-five years that 74 HOW TO USE "S.&H." GREEN TRADING STAMPS fact has not been removed. In other words, it has been intensified, and while the Company has some- where between 7,500,000 and 10,- 000,000 educated people in the United States (principally women, of course) who want stamps and who gather them when they are of- fered, there is only a percentage of them, perhaps one-half, to be con- servative, that will ask for them. The other half, whose trade is of equal value, appreciate the Stamp Service just as much. In fact, in the best stores in the country the best people of the town, the wives of some of the richest men who buy large bills, take their stamps and redeem them. But until they have been given to her by the merchant in the proper way after the trade has been made and the cash paid, the woman shopper is many times unwilling to ask for them. This is so important an element in the use of any stamp service that it is ob- vious or should be to all who will investigate that there is only one way to use the service and that is to use it, offer it, generously, hon- estly and graciously. The mer- chant who does this has never failed in getting the value of the Stamp Service in his store. He does not, because he is a competent merchant who does not buy a serv- ice that he cannot use or does not use after he has bought it. Our stamp service will work in most every store under these conditions. I have before me a letter from The Co-Operative Store at DuBois, Pa., saying that the Green Trading Stamp increased their cash sales more than 20% the first month of its use. This is a new account, but I can recite many instances of old accounts who have been using our system ten, fifteen or twenty years, that can show increases of from 10 to 25%. On a volume of trade of $100,000, this means from $10,000 to $25,000 in cash in hand that would otherwise have been either lost to the store entirely or carried as a book account, repre- senting additional invested capital. The first law of merchandising is to sell; the second law is the re-sale to the satisfied customer; the third law of good merchandising is to get your money for what you have sold. The "S.&H." Green Trad- ing Stamp, properly used in any store, will help solve these problems to the satisfaction of any good mer- chant who gets behind the service with an intelligent understanding, and not only himself, but who teaches the use of the service to all people employed in the selling end of his business. Overstocks, so prevalent to-day, can be reduced and converted into cash much more rapidly by the live merchant who uses the discount service than can be done by any method of cut price sales. This has been positively proven by a single merchant who used the one and then used the other and who finally concluded from the volume of trade and cash on hand at the close of each day over a period of time that the Dis- count Service furnished by The Sperry & Hutchinson Company had all the advantages. The Telephone Company pro- motes the sale of its service by say- ing that "every time a person phones, your business is brought to mind." I say that every time a person trades with you and gets the equivalent of a 2j/2% or 3%, discount offered over your counter by competent sales people you are not only brought to mind, but the customer has been made to feel a proprietary interest in your store. When the book of stamps is filled 75 HOW TO USE "S.&H." GREEN TRADING STAMPS and redeemed she is brought face to face with a fact that again re- minds her that to continue to trade in your store will be to her further advantage. In this discussion I have not mentioned the advertising value. I can only add in this connection that the women of this country do 90% of the shopping and spending of money in your stores, and it is said that a woman has two view- points about a secret, either it is not worth keeping or it is too good to keep. In our case it is too good to keep. The woman who has re- ceived a satisfactory return in the way of a premium for a filled book of stamps is quite sure to tell all of her friends. With the volume of trade grad- ually declining, and a still further decline in trade expected, now is the most opportune time for the merchant to adopt and get behind this Service. 70 THE THINKING MERCHANT THE thinking merchant, the one who is trying to solve his present drop in sales, readjust his business, do something and not drift, is interested in any informa- tion which will be helpful in reviv- ing business and restoring general prosperity. The Bankers' Maga- zine for May argues "Millions of savers are needed to supply the funds which will hasten business re- vival and promote general pros- perity. America has scarcely be- gun to show the world what she can accomplish when the whole people co-operate with vigorous determina- tion to be thrifty, saving, and ac- cumulate capital. Thirty million workers saving an extra dollar a week for three years add $5,000,- 000,000 to our working capital. It is doubtful if the capacity of the American people to save has ever been carefully appraised. Of the $65,000,000,000 estimated annual income of our people, probably $55,000,000,000 is paid by employ- ers as salaries and wages. The Comptroller of the Currency re- cently declared the income of the people of the United States in ex- cess of ordinary living expenses probably amounts to $10,000,000,- 000 per annum. In this connec- tion it is worth noting that the American people in 1919 paid taxes on $22,000,000,000 worth of articles classified by the revenue act as luxuries." There is nothing more inspiring than the awakening to the fact that our economic possibilities as a na- tion of savers are so great. It must be even much more gratifying to the merchant using the "S.&H." Discount Service to know he has contributed his part to the teaching of thrift and reducing the living expenses of his customers. In other words, the merchants that for the past twenty-five years have is- sued Trading Stamps to their cus- tomers have automatically added $100,000,000 to their savings, have built good-will for themselves and increased the volume of their busi- ness. If prosperity depends upon Thrift and it does the problem then is how to teach thrift and ap- ply it. We are twenty-five years old with this service. When a merchant gives "S.&H." Green Trading Stamps for cash trade, he is creating automatic sav- ings on one's expenses. He is not only teaching but applying practi- cal Thrift. The 'Thinking Mer- chant" has a vision justified by ex- perience of a nation of industrial workers speedily recovering the blessings of prosperity and can con- scientiously feel and know he has played well his part. The "Think- ing Merchant" knows the present demand for capital to take the place of that destroyed by war is unprec- edented, and he also knows that world reconstruction, business re- vival, the "new prosperity," will be accelerated and the ravages of war restored in proportion as all the people co-operate toward this end. The principal function of a mer- chant is to distribute, to sell, in- crease his "turnover" of merchan- dise. To the extent that the 77 THE THINKING MERCHANT "S.&H." System of Co-operative Discount or savings is put to work by him, he is, by one small act of his, helping to revive business, in- creasing the buying power of his customers and thus automatically increasing his own "turnover" of merchandise. The time has come when the people of America intelli- gently recognize the need for econ- omy. The losses they have sus- tained, reduced incomes and the lessons of experience have brought about changed conditions. The "Thinking Merchant" has de- creased his stock written off his loss and is on the threshold of doubt about his future. He re- luctantly lets go of the prosperity of 1919 and fits his mind to the busi- ness conditions of 1921. Why not rebuild your stocks of merchandise at new prices, reorganize and in- crease your service, and if not al- ready using it, join with the bank- ers that are willing to encourage Thrift by paying 3% on savings, by paying your customers that much for their cash trade. The Sperry & Hutchinson Company wants you to realize the value of small savings through the use of its Service. It wants to help make your store the "popular" store of the town. It wants more "Think- ing Merchants" to join with it in promoting practical Thrift, in meet- ing a situation that to-day and to- morrow and for years to come will not only see the sale of War Sav- ings Stamps and Savings Bank de- posits increase because they fit the people's small savings, but will see the "S.&H." Green Trading Stamp likewise more popular doing an even greater service for a trinity of interests ourselves, yourselves and the consumer. You thereby do a part of the "adjustment" necessary to fit the times and are doing some- thing that helps to create "new prosperity." 78 GIVE THE PUBLIC A CHANCE THE public is all of us and all of us are consumers. Sometimes our consumption is greater than at other times, and, notwithstanding the fluctuations of the "purse" there is a very large daily consumption. The hundred and ten million people now in the United States have never gone un- clothed, unfed or unhoused. And, more than all this, their standard of living, like their ideals, is very high. The public appetite and mode of living have improved. Over pros- perity made extravagance possible. Recent returns of the Treasury De- partment of the luxury and kindred tax items show that for the fiscal year ending June 30, 1921, the American people spent five billion dollars or over for luxuries. The ten per cent, tax on luxuries pro- duced more than five hundred mil- lion dollars on a tax list which in- cludes only about fifteen items. This of course does not include all luxuries nor all amusements. On those that are not taxed we have no way of knowing the amount which has been spent, which makes the above extravagance more appalling, considering the economic depression and unemployment throughout the country. The Thrift Division of the Treas- ury Department is working directly along lines to promote conserva- tion of cash by getting in touch with Clubs, Neighborhood Im- provement Associations, Women's Societies, Grade Schools and Sun- day Schools in an effort to reduce extravagance. The great difficulty in getting anything done to restrain the extravagance of the people, ex- cept by the most severe penalty of reducing income, is due to the fact that the public has no organization, no promotion committees, no pub- licity director, no machinery for getting over its message to its con- gress or to the merchant, by the bale, barrel or ton. The public has no paid staff of letter-writers nor does it invade Washington with delegations that have their ex- penses paid by the man or interest managing the "popular uprising." The public just goes about its reg- ular business in its usual way ex- pressing freely and bluntly to neighbors, friends and acquaint- ances its honest opinion. Individ- ual interests, class interests, cor- porate interests, all have an or- ganization, a purpose, a policy and a publicity director. IN BUILDING GOOD-WILL THE "S.&H." DISCOUNT SERVICE Is "THE TIE THAT BINDS" Every retail merchant to-day is after volume, that is, an increase in sales. The merchant is placing more reliance day by day on vol- ume of sales than on percentage of profits or gains so that overhead expenses may be distributed over a larger number of transactions. Some of this change of sentiment is due to scrutiny of general trade statistics. Two years ago we were thinking in terms of billions; now we are getting to believe in mil- lions, or perhaps even smaller amounts, and finally when people 79 GIVE THE PUBLIC A CHANCE get to the point that they are nor- mal, the economies that ought to play so large a part in the transac- tion of business will show them- selves and be the only cure that is worth while. In other words, to the extent that time-proved meth- ods and practices are followed and produce results will business read- just itself and merchandising go forward in the sane and sober way in which it should. The merchants, therefore, are making the strongest appeal to-day to their advertising departments and managers for an increase in sales. Every advertising manager is hired with the idea and belief that he has a "magic touch" which he can apply to the advertising copy of his store and get results and show increased sales. But the Advertising Department or the Advertising Manager has never been able to do more than his best. The merchant, therefore, to in- terest the public in what he has to sell uses other forms of service. His advertising department recog- nizing the human element, the un- organized condition of the public, seeks to furnish them with the nec- essary information, at least, to at- tract their attention and lure their money into their employer's store. There is nothing wrong about this procedure. The trouble, if any, lies in the fact that the public can only let the merchant know what he wants and is willing to pay by refusing to trade. He has no other organization with which to "talk back" and let his policy and feel- ings be known. This condition will probably always exist and gives rise to the necessity for the "truth in advertising," for the building up on the part of the merchant of a service system along with his ad- vertising, which is co-ordinate and which is co-operative. This serv- ice supplied by the store that has the goods to sell should be organ- ized and made a distinct feature and if the public desires it and ac- cepts it, they will quickly let you know by an increase in your sales. You have given the public the chance that they were looking for, and they respond or not according to the appeal. Our service is founded on human desire and lives because of it. Common sense is sometimes swal- lowed up by conceit, ambition and arrogance, not only on the part of an over-prosperous public but on the part of the merchants who have been unduly favored in the past. The "S.&H." Stamp Service, founded twenty-five years ago by Mr. Thomas A. Sperry, has lived because it is the one connecting link between the merchant who uses it and the human desire that is always inherent in the heart of the public. The merchant desires to increase his sales, to build good-will, to tie up his store to a thousand or more consumers in his community, as against his competitor. He wants cash trade. And cash trade is what the Discount Service of The Sperry & Hutchinson Company is based on. The consumers have a desire to get all they can for their money so buy where they get this first. The Discount Service or principle has long served whole- salers, jobbers and retailers. It has for twenty-five years existed between the retail merchant using "S.&H." Stamps and the con- sumer, and the justification for it all is that in spite of arrogance and prejudice on the part of a few mer- chants, their unwillingness to use this Service to build good-will and hold trade, many thousands of merchants have used it and the 80 GIVE THE PUBLIC A CHANCE public has never ceased to be in- terested, never ceased to gather the coupons and stamps of The Sperry & Hutchinson Company, and have thus benefitted by over $100,000,000 in cash or the mer- chandise of standard quality they have received. Now that there is a demand for lower prices in the minds of every- body, everywhere, and an accept- ance of the fact that our readjust- ment problem is one of reducing prices, and by so doing reducing ex- penses, what is there better that the merchant can do than to build up and increase his business and good-will by improvement of his service, whether it is through his advertising, through his well-as- sorted stock of merchandise or through the service he offers the public? The Thrift Division of the Government is working directly in the interests of reduced costs of living and doing business, and, while the Government's campaign is intended to be absolutely general and to mould the public mind to right thinking as well as saving, the opportunity thus created is lost to the retail merchant who does not use the "S.&H." Discount Service (Green Trading Stamp). No less an organization than the Associated Advertising Clubs of the World has recognized and approved the use of Trading Stamps so far as they were issued by good merchants as a dis- count for cash trade and as a means of promoting thrift. Merchants cannot only co-operate with the Government in this great thrift movement, but, by using the "S.&H." Service, can everywhere GIVE THE PUBLIC A CHANCE TO DO LIKEWISE. ASK THE MAN WHO KNOWS" WE are glad to have you in- vestigate us; our service; our ethics; our financial standing, and our twenty-five years' experience in serving the twenty- five thousand or more merchants who, by entering into contract with us, have developed their business as we have ours. We have learned to furnish a dis- count service and they (the mer- chants) have learned to use it to build, to hold, and to increase their cash trade. Some who were doing one million a year when they com- menced with us are now doing a five million a year business, and others doing five million a year business are now doing ten, fifteen and twenty millions. Stamps did not do it all, but for what they cost they produced the greatest and best results. These are the people to whom you should go to investi- gate us. Go to them without prej- udice; tell them your problem; and by comparing notes they can tell you what you want to know. They will confirm all that I or our sales- men claim for the "S.&H." Dis- count Service, and you will be im- pressed because it is given you ex parte. Something always tells me a salesman may grow over-enthusi- astic or that he must naturally pre- sent only the best side. You want the merchant's story from the mer- chant himself. This is exactly what I would want and is what I want you to have. I only ask you to get it from a merchant that has used and is using our present Service. In this connection, let me add that our "S.&H." Discount Service, while still a Premium Service, is not the same as ten years ago. If you were in business ten years ago you would confess to me, I know, that you had learned much and was a better merchant . to-day and that your store was equipped to meet all competition and was strictly up-to-date. This is ex- actly what we must do and have done kept up with our progressive merchants and excel any other trading stamp service. We know what it means to serve. We know if we can't do better by our mer- chants than other companies in our line, or put the individual stamp in the shade, that we could not live long. Having lived twenty-five years and learned to serve you we have resolved to continue to do so and do it better each year. We therefore want you to know all you can about us, and after you have made your investigation with our merchants, then come to our office, look over our financial condition. Every merchant is interested in the company that has the responsibility of the redemption of stamps he may issue in being sound and strong financially. In twenty-five years we have never defaulted and our capital and surplus of $1,500,000 and reserves of $2,000,000, are in- vested in liquid assets purposely to care for the circulation our mer- chants create. We are as liquid as any bank, and while we cannot make the same profits (ours being much smaller) we hope by building ASK THE MAN WHO KNOWS" a valuable service to retail mer- cash trade. Delays are always chants to some day see our profits dangerous. The competitor may in the bankers' class. I am hoping get ahead of you. Why wait when that this, our twenty-fifth anni- a 20 or 25% increase in your vol- versary year, will find you on our ume spells the difference between System and that you as well as our- profit and loss? Just remember a selves will realize that we can each book of "S.&H." Green Stamps is help the other in a business way worth to-day in American money a and together teach the consuming sum equal to about two hundred public where to trade to receive and twenty German marks, their discount (Thrift) on their 83 FIGURES, FODDER AND FINANCE THE merchant each day, each month, and each year does much or little. Whatever he does is shown by figures. This country in a business sense is pass- ing through a severe depression; figures each month tell us of poor earnings a decrease in gross and net, and at the close of the year they express the profit and loss of our year's efforts. Just now and for some time our figures are going to create dividend suspension and a pessimistic atmosphere. A Chi- cago banker, just back from Eu- rope, says: "The United States has gone further than any other nation in liquidation because we have com- pelled it all along the line, with the merchant, the farmer and w r ith labor. We are making great prog- ress, but we still have a long w r ay to go and the near future will show poor business. We will work out our problems more quickly than Europe because our people are de- termined to work them out, but we are not going to clear up everything in the next few months." The story they tell is that you are not making money perhaps losing money. You are therefore concerned as to your future, to- morrow and beyond. Fodder in this instance is a term meant to cover living expenses; food, rai- ment, and rent, etc., as applied to the individual; as to the merchant it means sales. This is the only way the merchant can get his food, raiment and rent regardless of a profit on labor and invested capi- tal. Reports are that the number of sales show a slight increase, but in dollars the volume of sales is generally 33 J^ percent to 40 per- cent below two years ago, arid that with a fixed overhead your profits have gone and your fodder becomes a capital charge. If business grows worse, this condition will grow worse. Many merchants are now down to the quick where they are living out of the capital account. Very soon you will need financial aid, reorganization with new cap- ital or the bankruptcy court to help you out. Your banker has been very reasonable; he will still continue to be ; yet he must protect the capital he has loaned you. Don't get the idea that I am painting this picture to sell you the "S.&H." Discount Service. Our co-operative stamp service helps hold trade and increases sales. It is, therefore, a very important fac- tor in retail merchandising has been for 25 years and will be for years to come. The thing I am trying to get over is a condition that surrounds you and me and that affects me person- ally, affects my Company, and I know affects you, and is not only unsolved but not always under- stood by the merchant. I have previously written and talked about greater and better CO-OPERA- TION. This Company built its business on the one great and valu- able principle CO-OPERATION and has reduced it to a practical thing for the merchant and con- suming public. I am justified, 84 FIGURES, FODDER AND FINANCE therefore, in closing this letter with an extract from the September Re- view, published by the National City Bank of New York: "It is not difficult to see what is the matter with industry in the United States and over the world," continues the review. "The situ- ation is practically the same every- where. The demoralization and poverty of Europe resulting from the war is, of course, a factor in it, but the chief cause, even in Eu- rope, is not the losses of the war, but the unbalanced state of indus- try as between the producers of primary products on the one hand and the producers of manufactured products and the groups engaged in trading and transportation on the other hand. South America and Asia export primary products and the prices are so low that their exports do not balance their im- ports and exchange rates are so heavily against their currencies that their purchases are restricted both here and in Europe. Within this country we have similar conditions. Trade cannot become normal until the situation changes. "It is a rather familiar comment, and not a profound one, that there must be something wrong with the existing order of society. Evi- dently there is. Briefly stated, in a society that is essentially co-op- erative people are refusing to co- operate. We have developed a highly specialized interdependent but voluntary system of industry, so complicated that many persons do not understand the relations be- tween the numerous groups who must work harmoniously together to make the organization effective. "There seems to be nothing to do but allow the economic forces to work things out in their own re- lentless way. The workers in each industry have the privilege of say- ing that they will not come down until every one else does, and per- haps not then. No one has au- thority to say who shall come down first or that anyone shall come down. It will have to be settled among themselves. "Meanwhile, however, millions of men are idle and millions in wages are being lost. It is a pity the agony must be so long drawn out, a pity the inevitable adjust- ments cannot be quickly made, with intelligent co-operation and spirit. A machine cannot be started unless all its parts are in right re- lation to one another; a factory cannot be operated effectively un- less all the departments are in bal- ance with one another, and it is the same with the industrial organiza- tion of the country and of the world." As one of the aids to better and larger distribution, to stabilizing SALES and to holding and at- tracting CASH trade, we are doing our "bit," 85 REACHING THE WOMAN WHO BUYS EVERY home has its purchas- ing agent, and her name is Woman. According to United States Government statis- tics, 432,662 American citizens have incomes in excess of $5,000 per an- num. Those having incomes of $5,000 or over include the well-to- do and rich class, so called. There are several times this number with incomes of less than $5,000 and many that do not get incomes suffi- cient to be required to pay an in- come tax. Yet all are consumers, and all who are organized as fami- lies with homes have a woman in charge of the purchasing. She is wide-awake, progressive, open to suggestions, loyal to her trust, hon- est, and a shrewd bargainer. The retail stores are where she shops, meets her friends and acquires an important part of her business edu- cation. She has the money, the home income, and she has the au- thority to buy the thing you are trying to sell. Every home has well-defined wants which are dis- cussed in the family circle, and the woman in the home is conscious of these wants every hour of the day and every day of the year. Not alone are wants of the home dis- cussed, but equally and even more the purchases made; and these are not discussed at home only, but with neighbors and friends if for no other reason than to learn by com- parison whether they are good bar- gains in quality and value ; but also as a matter of education. It has been estimated these women spend 90% of the family income and the sooner you concentrate your efforts to secure their trade the quicker and greater will be your success. For twenty-five years the Amer- ican woman purchasing agent has been the friend of the "S.&H." Green Trading Stamp until I am willing to accept what so many merchants can truthfully say, it is a woman's proposition; they like it and they not only trade where the stamps are given, but they talk it over at home and with their neigh- bors. What they receive is some- thing extra something they would not otherwise be able to have in many cases. Families with bare living incomes can afford few lux- uries; hence are the most fruitful customers of the merchant using our Stamp Discount System. It is a waste of your sales effort and ad- vertising appropriation to include them in your mailing list. The mailing list is only good in the homes having a margin of income above expenses, but thousands of successful merchants have told us from experience with our Stamp Service that homes of the rich as well as the poorer classes ask for their discount and appreciate it. The point I desire to make is that if you desire to reach the woman who buys, "The Chancellor of the Exchequer" of the home, there is nothing more effective that you can use than the "S.&H." Green Stamp. The woman knows it knows how to collect them where to redeem them and appreciates the discount however trifling it may appear to be to us men. I REACHING THE WOMAN WHO BUYS have a wife and daughter who are typical woman bargainers and sur- prise me every little while by their collection of stamps, coupons, tags, wrappers, and other tokens which they collect, convert, and then se- cure something they value for their use or my own use. Twice to my knowledge have I been given a Christmas gift once a leather chair and once a Gillette Safety purchased with "S.&H." Green Stamps. The home itself contains numerous useful articles thus pur- chased an ice-cream freezer, alum- inum ware, electrical appliances, silverware and cut glass, carpet- sweeper, etc., until I too have to admit Stamps are worth saving, and I now add my mite by saving coupons on cigars purchased and turn them over to them, or stamps given me when I purchase men's wear. Why shouldn't I or any other man? We will figure with other men to save the cent. Why should we ignore a book of Stamps worth much more? Fortunately the woman who does most of our family shopping is not only thrifty, but practical; is not only practical, but a shopper, a bargainer, and has a desire not truly womanly but truly human of making her money buy all it will. She discusses her purchases; the prices she paid for her groceries; her drugs; her shoes; her clothing; and does not fail to exclaim and "I GOT THIS WITH MY STAMPS." She is your best ad- vertiser, if she secured the stamps at your store, because thereby you have reached the woman who buys. Count the men and women for an hour in most any store and note how many more women there are, and it will confirm all I have said. Watch them wait in line at a stain]) booth to get their stamps; then visit one of our stores and watch them redeem their books. Some are there with one book, some two, some with several, with the same shopping instinct to get the most they can for it. Not only do they redeem but make selections for the future and commence at once to trade where they can get Stamps to fill more books. It is this un- organized body of millions of women buyers, plus our organiza- tion, plus yours, that build sales and keeps the factories running. We, like yourselves, are merchants co-operating to build sales and aid in the great problem of distribution through those merchants using our System. It is practical; it is last- ing; it is ethical, psychological, and scientific. It is the tie that binds as nothing else will do. Ask the merchant that uses it. 87 CHARACTER AND CREDIT GIVING of credit is a matter which has become increas- ingly important of late. The hazard of it is not the only feature, although it is by no means one to be ignored. Insurance people know that, when business is bad, the fire risk becomes greater, and credit men are aware that, under similar conditions, the temptation is stronger to resort to tactics to avoid paying debts. In a falling market there is a strain put upon persons who find values have shrunk ma- terially between the time of placing an order and that for the delivery of goods. The honest merchant will take the loss caused by his error of judgment and preserve the busi- ness reputation which is one of his chief assets. This is the case with old-established houses. But, dur- ing the boom period, a lot of con- cerns sprang up to rake in some of the easy money that was to be had. They had no traditions or reputa- tion to uphold. When values dropped they either repudiated their obligations on some technical- ity or other which the loose form of contracting permitted, or else went to the wall. Those that sur- vived are finding it rather hard sledding to get credit from sellers. In some instances, indeed, they are told their business is not wanted, this being true in the cases where an allotment of goods is made. At other times they find that they can- not secure as early deliveries as are afforded more scrupulous dealers. The upshot of it all is that many are discovering that character is a real tangible asset which counts in business. Financial statements are being more closely examined just now than ever before, and most credit men are eliminating many of the allowances which they formerly made for different asset items. Fixtures, money loaned and other items which were formerly allowed to bolster credit standing, get no consideration these days, and many new elements have entered into the determination of the net worth of debtors. A financial statement came into my hands a short time ago that showed a balance of $110,- 000 on the right side, without con- sidering the value of equipment, good-will, etc. It was necessary, however, to shave down that sum to $85,000, and we were not so sure the concern was soundly condi- tioned at that. They claimed $10,- 000 cash in bank and $100,000 worth of stock. Ordinarily there would be no disputing the cash item, but examination showed that this was probably kept to meet acceptances as they fell due, and there were plenty of these docu- ments outstanding. The merchandise, or stock item, is probably the most important factor at present in a financial statement, and has to be very care- fully figured out. It is safe to say that every concern making a finan- cial statement is giving itself the benefit of any doubt concerning the full value of the merchandise it owns. An accurate appraisal would show discrepancies, and particu- 88 CHARACTER AND CREDIT larly now when the market value of all goods is showing constant de- preciation. In the statement I re- ferred to we scaled down the mer- chandise valuation 25 percent., from $100,000 to $75,000, and let the cash remain at $10,000, but with some doubts, and thus pro- vided a net worth of $85,000. A larger reduction in the value of the merchandise would be entirely equitable, because the rule of thumb practice just now is to con- sider only "under the hammer" value. This is why the credit man cannot accept the valuation put on fixtures and equipment, however estimable they may be judged by the owner. Such things are not worthless, but their auction price is decidedly nominal with condi- tions what they are. Where receivables are concerned, another uncertain element enters, especially where the amounts are owed to retailers. Business re- verses of customers and unemploy- ment have their effect in causing slow payment, and bills owed to stores and tradesmen are often the last to be settled. The sums tied up in bills waiting payment, there- fore, get scant consideration nowa- days when they appear in credit statements, although they rank higher than fixed assets. In determining a safe basis for granting credit, the accepted ratio between merchandise and cash as- sets and indebtedness is, at present, two to one. The net worth is fig- ured out the way I have described. Sales in their relation to indebt- edness mark another important question in present credits. There are concerns being refused further credit for the simple reason that there is little hope of them over- coming the load of their indebted- ness. It may be shown that a period of five or six months is required to meet present indebtedness, even though net worth appears satisfac- tory. In computing the time nec- essary to make sales sufficient to meet current bills, the credit man should deduct about 25 percent, as cost of doing business from the sales over the period. Thus, a store doing $120,000 a year may roughly be figured to spend some $30,000 on expenses. Over $13,- 000 worth of business a month is required to pay off bills of $10,000 a month. And the mistake must not be made of expecting sales in dollars and cents to equal those of last year. The same factor of de- preciation that affects merchandise valuations must also be applied to sales, which makes necessary set- ting a longer time for the meeting of obligations. All told, the consideration of credits at present indicates new problems which must be studied in the light of new conditions, and not on the basis of rules that worked all right in the past. A thorough overhauling of credit principles is under way and, if the task is put off by credit men, the results are likely to be disastrous for them. The best remedy for credit is cash and the merchant himself must apply the remedy if anyone. He would do it oftener than he does except for competition and a drop in sales. I cannot refrain from suggesting that The Sperry & Hut- chinson Co.'s Service whereby you pay the customer 2}/2% for not only trading at your store, but for paying cash for what they buy ac- complishes two things always, but now more than ever of prime im- portance, holding trade and de- creasing credit. The character and financial stand- si) CHARACTER AND CREDIT ing of the "S.&H." Co. is of the pense, and a large use of credit at highest so may be your store, yet high rates. As we are helping you are face to face with conditions thousands of merchants to-day so that tie up capital may involve we can help you reduce your credit loss, certainly bookkeeping ex- sales and build up your trade. 90 Special Limited Anniversary Edition of which this is PRESS OF WILLIAM GHEKN, NKW YORK RETURN CIRCULATION DEPARTMENT TO * 202 Main Library LOAN PERIOD 1 HOME USE 2 3 4 5 6 ALL BOOKS MAY BE RECALLED AFTER 7 DAYS Renewals and Recharges may be made 4 days prior to the due date. Books may be Renewed by calling 642-3405. DUE AS STAMPED BELOW MUBiK MAR 1 OWED ow, or calL FORM NO. DD6, UNIVERSITY OF CALIFORNIA, BERKELEY BERKELEY, CA 94720 YC 05288 U.C. BERKELEY LIBRARIES CDDbDSS37M M194558 THE UNIVERSITY OF CALIFORNIA LIBRARY '- * ' *. *