Subversive | Page 5

millions of others. What did you pay for it?"
Frank Tracy allowed himself a slight smirk. "As a matter of fact, I got
mine through a discount outfit, only twenty-five dollars."
"Only twenty-five dollars, eh, when the retail price is supposedly

thirty-five?" Flowers was triumphant. "A great bargain, eh? Well, let
me give you a rundown, Mr. Tracy."
He took a quick breath. "True, they're advertised to retail at thirty-five
dollars. And stores that sell them at that rate make a profit of fifty per
cent. The regional supply house, before them, knocks down from forty
to sixty per cent, on the wholesale price. Then the trade name
distributor makes at least fifty per cent on the sales to the regional
supply houses."
"Trade name distributor?" Tracy said, as though ignorant of what the
other was talking about. "You mean the manufacturer?"
"No, sir. That razor you just looked at bears a trade name of a company
that owns no factory of its own. It buys the razors from a large
electrical appliances manufacturing complex which turns out several
other name brand electric razors as well. The trade name company does
nothing except market the product. Its budget, by the way, calls for an
expenditure of six dollars on every razor for national advertising."
"Well, what are you getting at?" Tracy said impatiently.
Frederic Flowers had reached his punch line. "All right, we've traced
the razor all the way back to the manufacturing complex which made it.
Mr. Tracy, that razor you bought at a discount bargain for twenty-five
dollars cost thirty-eight cents to produce."
Tracy pretended to be dumfounded. "I don't believe it."
"It can be proven."
Frank Tracy thought about it for a while. "Well, even if true, so what?"
"It's a crime, that's so-what," Flowers blurted indignantly. "And that's
where Freer Enterprises comes in. Very shortly, we're going to enter
the market with an electric razor retailing for exactly one dollar. No
name brand, no advertising, no nothing except a razor just as good as
though selling for from twenty-five to fifty dollars."

Tracy scoffed his disbelief. "That's where you're wrong. No electric
razor manufacturer would sell to you. They'd be cutting their own
throats."
The Freer Enterprises official shook his head, in scorn. "That's where
you're wrong. The same electric appliance manufacturer who produced
that razor there will make a similar one, slightly different in appearance,
for the same price for us. They don't care what happens to their product
once they make their profit from it. Business is business. We'll be at
least as good a customer as any of the others have ever been.
Eventually, better, since we'll be getting electric razors into the hands
of people who never felt they could afford one before."
He shook a finger at Tracy. "Manufacturers have been doing this for a
long time. I imagine it was the old mail-order houses that started it.
They'd get in touch with a manufacturer of, say, typewriters, or
outboard motors, or whatever, and order tens of thousands of these, not
an iota different from the manufacturer's standard product except for
the nameplate. They'd then sell these for as little as half the ordinary
retail price."
[Illustration]
Tracy seemed to think it over for a long moment. Eventually he said,
"Even then you're not going to break any records making money. Your
distribution costs might be pared to the bone, but you still have some.
There'll be darn little profit left on each razor you sell."
Flowers was triumphant again. "We're not going to stop at razors, once
under way. How about automobiles? Have you any idea of the disparity
between the cost of production of a car and what they retail for?"
"Well, no."
"Here's an example. As far back as about 1930 a barge company
transporting some brand-new cars across Lake Erie from Detroit had an
accident and lost a couple of hundred. The auto manufacturers sued,
trying to get the retail price of each car. Instead, the court awarded

them the cost of manufacture. You know what it came to, labor,
materials, depreciation on machinery--everything? Seventy-five dollars
per car. And that was around 1930. Since then, automation has swept
the industry and manufacturing costs per unit have dropped
drastically."
The Freer Enterprises executive was now in full voice. "But even that's
not the ultimate. After all, cars were selling for as cheaply as $425 then.
Let's take some items such as aspirin. You can, of course, buy small
neatly packaged tins of twelve for twenty-five cents but supposedly
more intelligent buyers will buy bottles for forty or fifty cents. If the
druggist puts out a special for fifteen cents a bottle it will largely be
refused since the advertising conditioned customer doesn't want an
inferior product. Actually, of course, aspirin is