drug chains. The gross profit was 65 percent or more on 42.5 percent of the items bearing private brands, while the highest gross profit reported for any standard brand was 60.9 percent.

Although the mark-up on private brands was equal to or higher than that on competing standard brands, according to a majority of the reporting chains, nevertheless private brands generally were priced lower than competing standard brands chiefly because of lower cost. About one third of the chains reporting on their pricing policies priced their private brands lower than competing standard brands but this group operated nearly three fourths of the total stores. Half of the chains sold both private brands and standard brands at the same price. About one sixth of the chains, operating less than 2 percent of the stores, priced their private brands higher than competing standard brands.

In addition to the general statements on pricing policies, reports were received on the actual selling prices, March 30, 1929, of private brands and competing standard brands which had the highest mark-up. If a hypothetical customer on this date had purchased all 424 commodities (212 under private brands and 212 under standard brands) from the grocery and grocery and meat chains reporting, his private brands would have cost him $12.99, or 12.3 percent, less than the standard brands.

A comparison between the selling prices of private brands and competing standard brands which had the lowest mark-up indicated that if a customer on March 30, 1929, had purchased 59 items under private brands and 59 bearing standard brands from the chains furnishing price information, the private brands would have been lower by 8.5 percent than the competing standard brands.

Similar comparisons for the drug chains indicated private brands of drug and miscellaneous products were lower than competing standard brands by 15.7 percent and for toilet preparations were lower by 26.5 percent. In a comparison between private brands and competing standard brands having the lowest mark-up, the private brands of drug and miscellaneous articles were lower by 6.3 percent and those of toilet articles were lower by 26.8 percent.

CHAIN-STORE ADVERTISING

Fifteen hundred and six chains reported their total advertising expenditures for 1928. These chains operated 59,959 stores and spent more than $65,600,000 for advertising, an average of $45,552 per chain and $1,094 per store. The sales of these 1,506 chains exceeded $4,322,000,000 and the ratio of advertising expense to sales was 1.52 percent. This ratio was greater than that of any of the 3 earlier years reported on, there being a steady increase in this respect, with ratios. of 1.15 percent in 1919, 1.30 percent in 1922, 1.42 percent in 1925, and 1.52 percent in 1928, as stated above.

The ratio of advertising expense to sales varied greatly among different kinds of chains. In 1928 the range was from 0.29 percent for dollar-limit variety chains to 6.77 percent for furniture chains. Low ratios were also reported by tobacco, meat, grocery, grocery and meat, and confectionery chains. High ratios were reported by men's and women's ready-to-wear, musical instruments and women's ready-towear chains.

Slightly more than 86 percent of 1,030 chains reporting their detailed advertising expenditures for 1928 used newspaper advertising and these chains operated 96.3 percent of the stores. Pamphlet and dodger advertising was reported by 24.9 percent of these chains, operating 32.1 percent of the stores, and window and counter display advertising by 23.8 percent of the companies which operated 5.0 percent of the stores. Billboard and outdoor advertising was used by 7.3 percent of the chains operating only 2.6 percent of the stores. Free goods as a form of advertising, was used by 4.3 percent of the reporting chains and these operated 4.0 percent of the stores. Street car and bus advertising was reported by only 1.7 percent of the companies, but these operated 13.4 percent of the operated stores.

Chains are large users of loss leaders, one of the purposes of their use being to attract trade. The use of "loss leaders charged as advertising," however, was reported by only 2.4 percent of the 1,030 companies reporting their detailed advertising expenditures, and these few chains operated only 0.4 percent of the total stores reported. Apparently the chains using loss leaders have generally failed to charge the cost to advertising.

It would seem that most independent dealers cannot compete successfully with the chains in newspaper advertising. The larger individual stores, doubtless, are in a better position with respect to such advertising than the small dealers and this is particularly true of some lines of business such as department stores, clothing and apparel lines and furniture stores.

The cooperative chains are of particular interest in connection with advertising, especially those in the grocery field. As is shown in the commission's report on Cooperative Grocery Chains, there were more than 300 cooperative grocery chains in the United States in 1929 and many of these groups engaged in extensive advertising programs. The stores of members of the cooperatives frequently are painted a uniform color and almost always have uniform signs which give a definite tie-up to the advertising program. Newspaper advertisements featuring specials are run at frequent and regular intervals, handbills and dodgers, and store and window cards are supplied, advice given on window and counter displays, billboards, street car and bus cards are used, radio programs broadcast and a few have run advertisements in national magazines.

CHAIN-STORE WAGES

The report on chain-store wages shows that 1,562 chains operating 63,657 stores and doing a business of about $4,600,000,000 for 1928 reported $20.60 as the average weekly wage of 292,172 store employees for the week ending March 30, 1929. As of the week ending January 10, 1931, the average weekly wage of 279,746 store people employed by 1,219 chains with 1930 sales of about $5,250,000,000 was $20.48. The aggregate average weekly wage for both 1929 and 1931 is influenced greatly by dollar-limit variety chains, grocery and meat chains, and chains of department stores, which collectively employ well over fifty percent of the total store employees reported and pay over fifty percent of the total wages for the 26 kinds of chains.

The average weekly wages reported for store managers as of the weeks ending March 30, 1929, and January 10, 1931, were $46.91 and $44.57 respectively. Three kinds of chains, grocery, grocery and meat, and dollar-limit variety, account for about 75 percent of the managers and 75 percent of the total annual compensation in both

years.

For the year 1929, only 8 of the 26 kinds of chains report average weekly wages for store employees below the general average of $20.60, but, among the eight, are the grocery ($19.73), grocery and meat ($19.28) and the dollar-limit variety ($16.13) chains. In contrast with the foregoing, seven kinds of chains, including meat, men's ready-to-wear, women's shoes, and furniture, reported for 1929 average weekly wages per store employee of $30 or more.

Comparable data on chain store and "independent" dealer wages for full-time store selling employees are available for the following eight kinds of business: Grocery, grocery and meat, drug, tobacco, ready-to-wear, shoes, hardware, and combined dry goods, dry goods and apparel, and general merchandise. The weighted average weekly wage of 3,933 independent store selling employees in these eight kinds of business for the week ending January 10, 1931, was $28.48, as compared with $21.61 for 107,035 chain-store selling employees. A simple average of the eight lines of business shows a narrower spread between the two figures ($28.10 for independents and $23.82 for chains respectively) but leaves the same distinct conclusion; namely, that for the period studied, the independents paid their store employees more than did the chains.

Independent store wages in each of the eight kinds of business furnishing comparable data were higher than those reported for chains, the difference varying from $6.92 for grocery and meat to only 65 cents for hardware.

For both of the weeks ending March 30, 1929, and January 10, 1931, there is a tendency for smaller sized chains to pay higher average weekly wages to store employees than do the larger ones in six kinds

of business, grocery and meat, tobacco, men's and women's ready-towear, men's shoes, women's shoes, and furniture chains. The same tendency also appears in store managers' wages in tobacco, women's ready-to-wear, men's furnishings, department store, furniture, and hardware chains. There is, on the other hand, apparently some tendency for the larger chains to pay higher average weekly wages to several types of employees than do the smaller chains; for employees in the dollar-limit variety, for managers in the dollar-limit variety and millinery, and in supervisors' wages in drug, dollar-limit variety, and millinery businesses.

THE CHAIN STORE IN THE SMALL TOWNS

The report on the chain store in the small town is based upon the study of conditions in 30 small towns, mostly within the range of 2,000 to 5,000 population as situated in the major geographical divisions of the country except the Mountain and Pacific divisions.

Eleven hundred and eleven retail stores in 25 lines of business were recorded in the 30 towns during the latter half of 1931. Approximately 20 percent of the total stores in 25 lines of business were operated by chains. There was an average of seven chain stores per town and not quite 30 independent stores per town. Between 1926 and 1931 a net increase of 103 in the number of chain stores was accomplished by a net decrease of 70 in the number of independents. This decrease in independent stores was the net result of a decrease of 72 stores in lines of business in which the chain stores also engaged and an increase of 2 stores in lines not engaged in by chain stores. Of the 115 chain stores in business on December 31, 1926, 91, or almost 80 percent, were still in business in 1931. Of the 910 independent stores in business at the close of 1926, there were 609, or approximately 67 percent, still in business at the time of report in 1931. In 9 towns having the greatest increase in number of chain stores there was a net decrease of 48 in the number of independent stores. In 10 towns with medium chain increase, the independents decreased by 17, and in 11 towns with least chain-store increase the independent decrease amounted to only 5 stores.

The five leading kinds of chain-store business in the 30 towns, as measured by numbers of stores operated, are grocery, grocery and meat, variety, dry goods and apparel, and department stores, in which lines the proportion of chains to total stores varies between 24 and 68 percent. The 3 food lines account for 92 of the 218 chain stores. The earliest report of the appearance of chain stores in the 30 towns was that of a 2-store drug chain in 1904, followed by a variety chain store in 1906 and a dry goods and apparel chain store in 1908. The food stores entered in 1909, but did not begin a steady growth until 1915. In only seven towns were grocery or grocery and meat

chain stores opened earlier than other kinds of chains, so far as these reports show.

It is estimated that the total sales for the 218 chain stores doing business in these towns in 1931 were $12,156,100, or approximately $400,000 per town. Almost half of the total stores and sales were in the food group.

Comparison of the average chain and independent rent together with the sales data shows that the chains can pay distinctly higher rents than independents without incurring a disproportionate expense burden on account of their higher average sales per store. This means that they have generally superior locations, and several instances were reported of the chain stores displacing independent tenants because of the rent paid.

Ninety-three of one hundred and sixty-two reporting chain stores were represented in local civic organizations, either through company membership, manager membership, or both. Of 153 chain stores replying as to contributions to local civic and charitable activities, 126 stated that contributions had been made by the company and 27 said none were made. For a period of 12 months, they contributed a total of $9,737.37. This amounts to approximately $77 per store contributing and to something less than $65 per store reporting.

For all kinds of chain stores reporting, the average number of hours of business per week is just under 70. Average overtime per manager working overtime is 6.3 hours per week, but including those not working overtime the average is 4.8 hours per week. At the time of the report in 1931, a total of 204 selling employees in independent stores received an average weekly wage of $18. 60, while 198 chain-store selling employees received an average wage of $16.89 per week.

STATE DISTRIBUTION OF CHAIN STORES, 1913-1928

The report on the State distribution of chain stores shows not only the distribution of chain stores but also the general trend of chainstore growth in the various States at 3-year intervals during the period

1913-1928.

A marked increase occurred in the number of stores reported for each year of the series over the preceding year in every geographic division of the country. Two thirds of all chain stores reported in each year are concentrated in the three contiguous and populous divisions in the Northeast-New England, Middle Atlantic, and East North Central, though since 1919 the aggregate proportion of stores reported in that section is gradually diminishing.

New York leads all other States in the number of both chains and stores reported for each year, notwithstanding a striking decline in the proportion of stores operated in that State since 1919, due to relatively greater growth in other States.