S 571 .fl57 Copy 1 What the Grower Should Know What the Grower S hou Id Know 1915 A Handbook of Reliable Information Copyright 1915 by American Fruit and Produce Auction Association ©CI.A410032 This modest little book aims to Why This put before you, the apple grower Book Was of the American Northwest, in a W"**®** simple way the advantage to you of marketing your apple crop by the Public Sale system. In recent years a tremendous im- pulse has been given, in all lines of business, to adopt efficient, up-to- date methods. The time is now ripe for the apple grower of the American Northwest also to take an advanced position in selling methods and to use the Public Auc- tion for marketing his crop. From time to time statements have been made, more or less accu- rate, for and against this method of selling. This is the first time that an authoritative exposition is made after a most searching and painstaking investigation of all the facts related. Prejudice Whenever the word "auction" Dies Hard appeared heretofore it suggested a red flag — a man standing on a counter or chair yeUing at the top of his lungs and knocking do^vn un- der the hammer whatever by way of rubbish happened to be at hand. This is as things were once. But with regard to the Pubhc Sales of fruit as conducted now by the large Auction Companies, the picture is so entirely different that it is hard to make a comparison. Business In this country Public Sales of History fruit and vegetables are young ^ ^y^ compared with the business abroad. In England, Germany and France Public Sales of fruits and vegeta- bles are tremendously important and increasingly so. An example of their importance in England will suffice. England's over-sea importation in fruit and vegetables is vastly in excess of its home pro- duction. Public Sale has been in practice there for 100 years. In the three important cities the of- ferings at Public Sale are as fol- lows: Glasgow: 1. All fruits. 2. Nearly all flowers and plants. 3. Some foreign vegetables, principally from Holland. London: ^ of all foreign fruits and vegetables. Liverpool: All apples from Tasmania, Aus- tralia, America, Canada and Spain. All oranges from Jaffa, Italy and Spain. All lemons from Italy and Spain. Spanish melon, tomatoes and po- tatoes, onions from Egypt and Spain. Almeria and Lisbon grapes, etc., etc. The importance of Public Sales in England will be emphasized when it is stated that England, the past year, imported into Liverpool, London and Glasgow about 1,788,- 236 barrels and 1,096,054 boxes of American and Canadian apples, all of which were sold at Public Auction. In the United States Public Sales began at about the time of the Civil War and have had a won- derful and sound growth ever since. Today 85% of Florida oranges and grape fruit, 75% " Pine apples, oranges and grape fruit from Porto Rico, Cuba and Isle of Pines, 98% " California oranges, lemons, cherries, peaches, apricots, pears, plums and prunes, 100% " Sicihan lemons, 100% " Almeria grapes from Spain, 100% " Cherries, pears and prunes from the Pacific Northwest, which are consumed in the large cities of the Eastern part of the United States are now sold at Pub- lic SalCj In addition, the bananas that are consumed in New York and Baltimore are disposed of in this way. Last year $150,000 worth of chestnuts from France, Spain and Italy added to the vast volume of business going through the Auction Companies of New York. The Auction Companies ask for Choice of a no contract from the growers of the *^^ceiver Pacific Northwest. They do not accept consignments direct. Con- signments must come through rep- resentatives of the co-operative as- sociations or through private agents or individual growers. The Auction Companies want the grower represented at the public sale of his fruit to make the system of checks and balances complete. It should be said right here that the Auction Companies have no wish to interfere with any F. O. B. or delivery sales, you, as grower, can make. They realize that with the ever-increasing volume of the apple business of the Northwest a large percentage of the apples can- not be marketed by the F. O. B. system or by private sale. The use of their Public Sales rooms are of- fered, as well as the services of their skilled public salesmen, in dispos- ing of this part of the crop. Complete An attractive feature of the fruit Publicity Auction System is that its work- ings are in plain view of all. Daily auctions are public sales in every sense of the word. The Auction Companies have no business se- crets. Any question that may be asked of them can be answered and will be answered if they are com- municated with. The Public Sale system calls for a complete daily record of sales which is printed and may be referred to at will by both seller and buyer. No private salesman can get The Private from the buyer more than the mar- ^^^^ Way ket warrants. If a buyer over- reaches himself and finds he hag paid more than his competitor, he goes back to the private seller and asks him to cut down the price to what his competitor paid. The pri- vate seller does this to hold his trade. He will, for example, tell a buyer that if he will pay $2.00 a box, the sum of fifty cents or twenty cents as the case may be, will be returned to the buyer as a rebate, if he, as the seller, finds it necessary to lower the price that much during the day. The auction price stands and admits of no re- duction. California and Florida shippers have their fruit disposed of at one time each day in a Public Sales room where all the buyers are as- sembled and where each with his own particular interest to serve acts as a stimulant on the other. Picture a large business like the Northwestern box apple business divided into small, scattered selling units rather than concentrated in one place. Picture the buyers scattered. Picture two men quietly talking the matter over in the back of a store. The seller is trying to get as high a price as the drift of the market will stand, but he can- not get a higher price and at the same time keep the buyer's busi- ness. The seller is handicapped by not knowing what supphes his com- petitors are offering. The seller has undesirable sizes of fruit which the buyer does not want, but which the seller is inducing the buyer to take by offering the desirable fruit for less money. The buyer is try- ing to obtain the apples at as low a price as he can. No public record is kept of the amount paid to the shipper's representative in this dickering. The grower must trust to the good name of the house whicli he employs. Now, after viewing this mental picture of two men dickering in each of several stores through the long day, then compare the Public Sale in the Auction Room and you will gain the viewpoint of the pro- gressive grower of California and Florida. The Public Picture all the fruit and all the Sale Way ^uyepg concentrated in one place at one time. At a given time the gong rings and the buyers assemble in the Sales Auditorium. As a winning bidder need to take only a limited number of boxes the repre- sentative of the largest Jobbing House, or Department Store or Grocery House, or Chain Store man or Hotel man or large Restau- rant, in town who needs 200 boxes of a certain grade of fruit must bid against the push-cart salesman who wants but a limited quantity. The excitement grows intense. Each buyer fears that his rival will get the particular fruit that he has de- mand for. With this free working of the law of supply and demand the price is fixed. Frequently per- sonal rivalry among several bid- ders results in the price being pushed far above what the natural law of supply and demand war- rants. Many a buyer goes to the auc- tion with the idea of buying but 50 boxes, and goes away the pur- chaser of 100. He sees what he thinks he can make money on and plunges. The next hour he and all of his firm are at work trying to sell the fruit he has bought. In this way the fruits that are sold at auc- tion are featured and boomed by hundreds, while the boxed apples that come through private sales have only the support of a few job- bers in each city. Each jobbing house of the city and a number from the tributary district; each fine fruiterer; each broker who is buying for others; many retail grocers and the like, know that they will have a demand from the customers for a certain amount of fruit during that day. The buyers arrive in time to in- spect thoroughly the fruit that is on display in one large warehouse or on one dock. In that large ex- hibit each buyer — whether the fine fruiterer, or the department store, or the chain store, or the retail grocer, or the push-cart man finds the sizes and grades that he wants — in fact that he must have, if he is to keep his customers from go- ing next door after his fruit. The men who do the actual sell- The iiiff are a rare set. It would be im- Auctioneer A Puhlic possible to find a higher type of salesman business men in all this great coun- try than they are. These men must not only be efficient to a degree, but if they were not the very soul of honor they could not maintain themselves more than a day in their delicate positions. Their reputa- tion for honesty and impartiality is almost unique. It takes years for an Auction Company to make an Auctioneer of a man. The great- est asset that an Auctioneer has is the confidence of the receivers and of the buyers in his integrity. Is it a wonder, then, that he is careful of his reputation ? He must be effi- cient or no receiver will allow him to sell his fruit. To be efficient, the Auctioneer must be of sterling honesty and have that reputation among the buyers. The Auc- tioneer must know and be a spe- cialist in the fruit business. His duties require him, just previous to the sale, to examine the fruit that he is to sell as to quality and condi- tion and make a notation on his catalog so he can secure the highest price for the different grades of fruit. He also must know the qual- ity and condition of the fruit sold by his competitor. It is literally impossible for an Auctioneer to be other than honest and remain in the business for a single day. The agent of the grower sits on the stand alongside of the Auctioneer and sees every bid that is made the same as does the Auctioneer himself. The Auc- tioneer can show no favoritism; and he must know values. Each buyer is entitled to know why his bid is not accej^ted. If the Auc- tioneer were not fair to buyers, his very life would be endangered on the spot, as this fruit buying means a living to those who attend the public sales, and they demand fair play. The fruit Auctioneer pays a heavy license and is under bond ac- countable to the Board of Alder- men. Combina- There are too many racial differ- tions ences and too many varying inter- ests involved to enable the buyers to form a combine in the market. There are Greeks, Hebrews, Irish- men, Germans, Italians and Americans, both large and small buyers, at every Public Sale. The Auction Companies have made combinations impossible by forbid- ding one buyer to bid for any other who is present at the sale. Com- petition in bidding is keen in this striving in the open Public Sale; and the price of fruit is forced up- wards to the point at which there is only a small profit for the whole- sale merchant. The grower who sells at Public Sale has yet another check. His agent can quickly dis- cover any combination that might be attempted. It is his privilege to withdraw the fruit from Public Sale. Finally, the shipper need not trust the receiver. Every public sale is a matter of public record. The catalog and sale sheet must be kept for a certain period in each State before their destruction is permitted. Some of the Auction Companies keep their papers for years. The shipper can write to the Auction Company and get a mailing catalog showing the cor- rect prices. In the City of New York, for example, the Daily Fruit BeiJorter, an independent paper, publishes each day the results of the sales, car by car, and brand by brand. Anybody may sit in the Public Sales Auditorium and hear the Auctioneer sell the fruit to the highest bidder at a certain figure. He may note on a catalog what his fruit sold for and then compare that with the account sales subse- quently rendered by the Auction Company. He will find that they agree completely. There are so many checks upon everyone con- cerned in the pubhc sale, there are so many incentives for keeping in the straight and narrow path, that dishonesty is not even tried. There are not the wild fliictua- No Wild tions in the prices at auction that Fluctuations some imagine. The fruit and the buyers are all in one place and the law of supply and demand is not interfered with. The fruit auc- tions are held regularly, and every day (Saturday excepted) in the large cities, at a regular schedule time. The buyers who attend these sales make a regular business of buying and selling fruit. All of them have an outlet through the consumer ; they supply fruit to the retail storekeeper, the wagon ped- . dler, steamers and trains, and to dealers in nearby cities. All of the buyers speculate occasionally, but the great bulk of their buying is to supply a present need. Selling There are few points connected Expenses ^^.jth the marketing of fruit that equal in importance the matter of exj^ense. It is, therefore, well for you, as an apple grower, to re- member that the Public Sale sys- tem of selling fruit enables you to get prompt returns from the Auc- tion Companies at a low selling ex- pense, and to obtain for your fruit prices which are only produced by active, concentrated competition : where all the buyers have an oppor- tunity to view your fruit and place ^ their bids upon it. Because of the intense publicity that attends every move in the Public Sale system you need not worr}^ about the honesty of the firm with which you deal. It does not matter whether the firm is of old established reputation or of more recent standing, because the auction works as hard for one as for the other and renders accu- rate returns like a machine. Auctioneers know the many hun- The Buyer dreds of buyers whom they face daily, by name, or by some nick- name that they have been forced to give those whose names are not pronounceable by an American. The Auctioneers themselves are practically all Americans. The name of each successful bidder is announced by the Auctioneer as well as the price that he has agreed to pay and he repeats the number of boxes that the bidders announce that they want. Even outside the Auction Rooms the Auction Companies come in contact with buyers. Seven-eighths of the fruit is sold on credit, for which the Auction Com- panies are responsible. The Auc- tion Companies must, therefore, know all about each buyer's busi- ness ; who his competitors are ; how much financial backing he has, and whether he has been honest in his business dealings. Through these facts they judge the extent of the credit that he should be given. Through this intimate contact with the business of each of the sev- eral hundred buyers, the Auc- tioneer learns to play one buyer against another. It is his delight to get rivals in business bidding against each other on the same line of fruit. Tactics like these enable the Auctioneer to lift the whole scale of prices. Well packed fruit in good condi- tion brings a premium at Public Sale which no private salesman dare ask for. Business The volume of the apple busi- Volume of ness has been growing so fast that ^PP^® it has become absolutely necessary for the growers to adopt the Public Sale system of selling. In 1914- 15 about 15,000 cars were shipped and this amount tested the capacity of the private system of marketing to the limit. In 1923, at this rate, counting out half of the acreage planted and then discounting the remaining acreage by half, there will be enough bearing acres to fur- nish 125,000 cars, — a stupendous total. Can the grower contemplate for a moment this enormous output divided into small scattered selling units and the buyers divided? Regularity of To give the Public Sale system Shipments Qf selling apples a fair trial, a quantity sufficient to attract the buyer, including high-grade fruit, should be supplied the auctions regularly. Distribution would be widened. The large number of firms that deal exclusively in fruits sold at auction, being assured of a source of supply at auction, would welcome the opportunity to add apples to the list of commodities dealt in. Buyers prefer the auction method of handling fruit because the sales are public, regulated by law, and all are certain to get a square deal. They then know what their rivals are paying for apples and are on an equal footing with them. They can economize time. They can quickly look over all the fruit in the market, select the sizes wanted and buy them if they are willing to pay the price. Confidence is the offspring of publicity; and just as the founda- tion of the auction system is laid on the rockbed of publicity, so the con- science of both buyers and sellers is founded upon the surest and most lasting business basis possible. Confidence lessens timidity and re- straint in buying. Confidence does not thrive in the dark. Confidence lessens sham practice and double dealing as between buyer and seller, and the Public Sale system strives to promote this spirit of confidence at all times. Why Many The extent to which the apple Will Not buyers now daily attend the daily- fruit auctions varies in localities. Apples In all of the cities, however, it is certainly true that the vast ma- jority of the firms that handle Northwestern apples also deal in the other fruits that are sold at Public Sale in the daily auctions. But there are hundreds of firms that do not handle apples now be- cause they are not sold through the auction. The small percentage of firms that do not have buyers at the daily auctions, who make a spe- cialty of apples, would send them to the auctions if a substantial per- centage of the first-class apples were supplied the auctions in regu- lar quantities. They would be able to save time and energy, get the sizes and grades they want, and would be assured of fair treatment. They would have no fear of secret discriminations. Then, too, they would not want their rivals to have a source of supply which they themselves do not tap. At the auc- tion sales there is always a chance of getting the other man to pay more than you pay for your sup- plies. Relief A Public Sale can relieve a glut- of Glut j-gfj market as no other medium can. Just as soon as the market sags the representatives of the peddlers at the Public Sale buy heavily. With all the push-carts and ped- dlers' wagons featuring apples, many not handling anything else for the time being, vast quantities of fruit can be disposed of in case of a glut. The rate of consump- tion established would cause a re- bound that would be a foundation for the prices of the supplies fur- nished later. Had the Public Sale system been employed last fall when so many Jonathans in poor condition reached the eastern markets, their distribution would have been a matter of comparative ease, as against the private sale system un- der which a disastrous glut of the market actually occurred. There was not the distribution among peddlers and push carts, fruit stands and stores as there would have been had the whole bulk of these apples been put through the auction. The Public Sale system has a particular advantage over private selling in that, once the glut is re- lieved, the stimulated rate of con- sumption sends prices upward at once. Under the private sale sys- tem the jobber overstays his mar- ket. He does not know the quan- tity of his rival's supplies or what prices he is charging or is going to charge. He is timid. The buyers, who are just as shrewd as he, hold down the price as long as they can. The price rises slowly, and this year did not rise appreciably until the late spring. At the Public Sale it is quickly apparent that all buyers want a certain kind of fruit. No buyer can hide the fact. He must bid lively and high if he is to get the fruit that his customers want. Distribution Public Sale A recent concrete example of the Widens ^yg^y Public Sale of fruit increases the number of buyers and thereby widens distribution is the sale of bananas at Public Auction in the cities of New York and Baltimore. The Company importing the largest amount of bananas changed from Private Sale to Public Sale in New York City April 1, 1913, and in Baltimore July 1, 1914, with the result that the number of buyers increased nearly tenfold. It has happened that in a single year in some Public Sales cities California deciduous fruits have in- creased 30%, and in a period of five years 100% when California had a heavy crop; and Public Sale has been sufficiently flexible to take care of and distribute the increased crop. Similarly sales of Florida oranges in Boston have, in a period of five years, at Public Sale, in- creased 350%. Now compare with the foregoing the consumption of Northwestern apples in Boston under Private Sale: Season 1911-1912. . .370 Cars " 1912-1913. ..365 " " 1913-1914... 354 " " 1914-1915. . .360 " The result is that although the crop has increased greatly Private Sale has not been sufficiently flex- ible to widen distribution. A Fair Trial The Auction Companies ask the grower to demand of his represen- tative to give the PubHc Sale a fair trial, which means the furnishing of regular shipments of high-grade fruit for a reasonable length of time ; particularly is it advised that good fruit be offered at Public Sale and not some that has passed its prime. Fair play is asked because a square deal is given. If only an occasional car of fruit that is far from its prime is offered at Pubhc Sale it will have a bad effect on the mind of the buyer. Eliminated Because the auction disposes of Receivers the fruit quickly at the best prices ^^^ obtainable it is conceded almost universally that the Public Sale is the proper way of selling soft fruits that arrive in standard boxes and packages. Cherries, Bartlett pears, apricots and prunes from the Pacific North- west must be sold through the auc- tion. Receivers concede this. Be- cause apples keep longer than cher- ries and prunes and most of the pears, receivers have been able to dispose of apples through the more expensive method of private sale. Under the Public Sale system the receiver represents the grower. He watches the interests of the grower, keeps the grower in touch with market conditions, talks up his shipper's fruit among the trade when they come to view it, and mails the money paid to him by the Auction Company to the grower. speed in The mere fact that apples keep Distribution [onger than most of the fruits sold at auction does not furnish ground for argument that it is not suitable to dispose of them at Public Sale. All apples cannot be kept. Con- sumption must not be restricted. They must be distributed Hke other keepable fruit, in an orderly man- ner. In this way the responsibihty can be divided among a large num- ber and partly shifted from the grower and his organization. The shipper will have his money and also the support of the buyers in supporting the market in the most healthy way; this by boosting the fruit among the retail merchants and thereby boosting consumption. Apples from the Northwest are good keepers and it is wrong to suppose that times do not come and have not come when apple growers did not suffer through the lack of a quick and immediate outlet for their product. The case of the Jonathans referred to before illus- trates that point. One great essential in marketing fruit is promptness in the delivery to the buyer. The private seller's ability to make prompt delivery is limited to the number of trucks owned or controlled by his boss truckman, but the auction method with its immense volume employs so many public truckmen for their daily work that they are at all times equipped to handle any quantity. For example, 100 cars of Cali- fornia fruits — in addition to the other lines of different varieties selling — are delivered in a single day, and have not overtaxed the capacity of the auctions in one of our large cities. No single private seller could ap- proach that speed in delivery for even a small fraction of the volume. The more prompt the delivery the more satisfaction to the buyer. If the apple grower would dis- pose of his fruit under the Public Sale system his net results would be greater than they are now. Ac- tive, concentrated competition makes good prices so long as the competition is among the buyers; but it is disastrous to the shipper when it exists among the sellers. A chain is as strong as its weak- Conclusion est link. The past season's lesson should not be forgotten. What happened then should be avoided. The way to avoid it has been shown here, you have the remedy. No matter how high a point of effi- ciency you have reached in growing and packing, there is still left the tremendously important factor of marketing. Instead of a few to bid on your product you can have the many. Instead of scattered selling units , you can have concentration. Goods on view in an alley cannot compete with those shown on Main Street. Main Street has the crowd. Absolute fairness; prompt serv- ice; the ability to sell at once in- stead of storing; a saving in time; a saving in money — all these are yours for the taking. If they seem worth having you now know how to get them. Ship steadily, not occasionally, all the grades and varieties you produce. Instruct your agents positively to have your apples sold at Public Sale by the Auction Companies. Then, when your agents send your checks, and the original account as rendered by the auction, compare the speed, com- pare the cost, compare the net re- sults. The Public Sale, as was stated in the beginning, has been in suc- cessful use for one hundred years in Europe, for fifty years in the United States. It is coming into use more and more, eventually every shipper will use it. The pro- gressive man is he who grasps a good opportunity promptly. To wait is to lose a business oppor- tunity worth using, worth your using, this season. It is up to you. AMERICAN FRUIT AND PRODUCE AUCTION ASSOCIATION 202-204 FRANKLIN STREET NEW YORK V. K. McELHENY, Jr., Pres. N. C. IVES, Vice-Pres. H. B. HEGEMAN, Sec'y-Treas. EXECUTIVE COMMITTEE W. E. BIGALOW C. B. DOWNER J. M. FANNING J. J. CASTELLINI V. K. McELHENY, Jr. N. C. IVES H. B. HEGEMAN For further information please communicate with: Baltimore, Md. Baltimore Fruit Exchange Boston, Mass. H. Harris & Co, Buffalo, N. Y. Union Fruit Auction Co. Cincinnati, Ohio United Fruit Auction Co. Cleveland, Ohio Consolidated Fruit Auction Co. Detroit, Mich. United Fruit Auction Co. Kansas City, Mo. Kansas City Fruit Auction Co. New Orleans, La. The Fruit Auction Co. New York, N.Y. Brown & Seccomb New York, N.Y. Connolly Auction Co. New York, N.Y. The Fruit Auction Co. Philadelphia, Pa. Philadelphia Auction Co. Pittsburgh, Pa. Union Fruit Auction Co. Memoranda r Memoranda Memoranda Memoranda LIBRftRY OF CONGRESS 002 671 705 fl %