The Coming of National Advertising: The Wholesaler

As the Civil War decade faded into memory, virtually every facet of the economic climate favored further American industrial development. The protective tariff had been enacted, and favorable immigration legislation found more than 380,000people swelling the labor and commercial market in 1870 alone. Natural resources were early exploited, and laborers received low wages that helped to raise corporate profits.

The expanding railroad network was required for large-scale production, providing a cheap means of transportation for the raw materials necessary for productive enterprise as well as an efficient means of distributing the factory’s output to wider geographic areas once it had outgrown the demand of local markets-markets of increasing size as America’s transformation from a rural to an urban society continued. But herein the manufacturer faced a problem. The provision of goods for a local market involved in time and space.

The typical wholesaler of the 1870s did considerably more than bring the products of the seller to the attention of prospective buyers in a distant market. Indeed, the manufacturing units wishing as certain a market as possible, the manufacturers apparently regarded the wholesaler as their market and produced to their specifications. As the trade publication Printers’ Ink was later to note, “The jobber told the manufacturer what he wanted made, how he wanted it made and what he would pay for it”,

Thus, advertising throughout the 1870s shouted the wares of few manufacturers of consumer products. According to an examination of the advertising in newspapers and periodicals of the time by Neil Borden, the important advertisers, aside from the retailers themselves, were “proprietary remedy manufacturers, book and periodical publishers, amusement companies and transportation companies.

The typical manufacturers in this watershed period were certainly achieving a steady growth in this success of their products in the marketplace. In the process, they were eager to place more of their income into plant and equipment necessary for increased output. But herein lay a problem. As long as wholesalers were dealing with undifferentiated products, they could force manufacturers to complete on price.

This was a fortunate position for the wholesaler, but it tended to produce low profit margins for the producers, with a corresponding repression of capital investment. This, of course, presented s difficult problem for the manufacturers, who wanted to control the price of the product problem for the manufacturers, who wanted to control the price of the product themselves, not have it dictated to them by the powerful wholesalers.