In discussing the general mess we had to do with an organization regularly created and fitted to ship life through law and regulation. It needs only the development of detail to make it fulfill its function. With the ship's store or canteen, as it is popularly known, the situation is different. The question of its proper establishment must be taken up before those of administration. Though a flourishing institution on most vessels in the navy it has no official standing as a necessary and required part of the ship's organization. It exists by suffrance only, because it is so convenient. Just how convenient may be better appreciated, perhaps, by giving a few figures from actual experience. On the Missouri, the sales from February I, 1904, to August i8, 1906, thirty and a half months, have aggregated $41,614.12. The last twelve months, in port and out, sales averaged $1676.82 per month. The three months of the last winter's cruise away from home they averaged $2300.07 per month. A better idea of what this means in the way of business may be gained from the fact that since it opened there have been sold over its counters the following items among others: 116,853 packages of tobacco, 58,390 cakes of soap, 49,968 packages of candy, 43,509 packages of crackers and cakes, 5796 packages of dentifrice, 3815 towels.
A statement of the reason the regulations governing such a substantial business are permissory or advisory only, discovers the root of all difficulties of the present canteen. The funds creating and supporting it are furnished from private means. As a consequence, its establishment is optional. Some ships do not have canteens. Those which do, manage them as they please, independently of all other canteens on other ships and all other stores on board the same ship; subject only to the most general provisions as to their conduct and for the audit of their accounts.
This ought not to be. If the canteen has won its place it should be recognized and established on a regular basis, especially when it takes but little experience to see a far wider field for it, under such conditions, than it now occupies. Canteens would be useful ashore at our various stations as well as afloat, and for the families of officers as well as for those of enlisted men. It would mean much to all such to have access to a store 'selling articles at manufacturer's cost; and much to the canteens at sea to have depots ashore to supply stock in which no middleman's profit would figure. In other words, if a way could be found to organize the present independent units into a system like that of the commissary stores in the army (with some of the features of the post exchange added), all the usual advantages flowing from co-operation would result. The need for such stores exists, as is proved by the ever-increasing demand upon ships' canteens now operating; the machinery for assembling and distributing their supplies is at hand: all that is required is the organization itself, the decision as to whether it can be effected within existing statutes, and, if not, the determination to secure the necessary authority.
The effect of being able to deal at all times—as one is now occasionally when aboard a ship which has a long-established canteen—with a store from which goods are sold at prices made possible by lumping purchases sufficiently to get wholesale discounts, is plain enough. Officers and men would be able to protect themselves, in a degree, from the ever-advancing prices of all ordinary commodities by increasing the purchasing power of their money. Or, to put it another way, they would sensibly increase their pay. How much this increase may be will be seen farther on.
Until some means are suggested by which such a millennial state of affairs can be brought about we shall have to take those provided and make the best of them. With this view let us take up the features of the present ship's store with its bad and good points. Through a statement of them, and the advance of views, perhaps discussion can be raised which will clarify the situation and bring more or less conformity to practices now as varied as the number of ships having canteens.
The regulations provide: "He (the commanding officer) may in his discretion establish a ship's store for the sale of articles not forbidden by law or regulations when the crew desires such action and is willing to contribute the funds necessary to make the first purchase of stores."
For the sake of brevity, the disadvantages of a position so indefinite may be put in more or less tabulated form.
It is not a compulsory institution. In fact, its establishment is made difficult. If the enlisted men are not long-sighted enough to advance the funds necessary, the opening of a canteen may easily be delayed for an indefinite time. The requiring of contributions from the crew is but a poor makeshift as any one can testify who is acquainted with the conditions on board a new ship, where the men do not know or trust their surroundings, and where for the most part they have no money to spare from immediate needs. Cases are rare where sufficient funds are raised by a crew to get any but a meager stock for the first day's sale. Yet there is no doubt of the value of a canteen to all hands; to all through the saving afforded; to the careless in foreseeing their needs in time before leaving port; and to the ship from a disciplinary point of view.
The contribution plan brings all sorts of disadvantages in its train. The contributors have to be repaid and the money to repay them, as well as to furnish the capital to run the business, has to be obtained by boosting prices to full retail figures for, usually, a year or more. With fixed charges, like rent, salaries, etc., reduced to nil it should never be necessary to charge retail prices. A ship of the first class ought to have a capital of at least four thousand dollars to work to best advantage. It may thus be seen what a money-making device the canteen is forced to be until it can repay its loans and get to this favorable position.
When necessity for the use of this accumulation no longer exists, as when a ship goes out of commission, what is to be done with it? The regulations provide that in such a case the assets shall be divided equally amongst the members of the general mess. The general mess does not include all the patrons of the canteen; officers, chief petty officers, and others help to build it up. Again, if the usual changes in the ship's complement have taken place there remains but a small portion of the men who originally helped to create the fund. Founded by one set of people who reap nothing from it save convenience, at least through the "retail price" period of its upbuilding, its profits are divided by another set. To show the truth of this the experience of the Missouri, believed to be typical in this respect, may be cited. After being in commission thirty-three months but 242 of her original complement of 730 odd enlisted men yet remain. More equitable by far would it be to all concerned to run the store on borrowed capital if it could be done, even if handsome interest had to be paid on it.
There is no uniformity amongst ships' stores either in (1) policy; (2) prices; or (3) quality of stock. To take up differences in policy first. Some variations are due to the necessities in individual cases as just shown, or on account of insufficient space to stow a proper stock, or of poor markets in which to buy. But aside from these considerations, policy differs as widely as the ideas of the managing officers. The phrase "different ships different long splices" was never more aptly illustrated. Ships may have canteens or they may not. One store keeps only articles it is thought the crew ought to buy for its own good; another tries to keep everything there is a collective call for, and offers mail-order facilities for unusual items besides. As to this last, there ought not to be any difference of opinion; but there is. If the store is instituted for the convenience of the ship's company it ought to be made to fulfill that function to the maximum degree. Of course, no obligation exists to create business by raising an artificial demand with catch penny articles, or through display advertising, such as rests on a private business, where more sales mean more dollars profit. But every article which is twice inquired for should be kept tentatively in stock and well displayed until the question of its desirability as a permanent addition is settled. Moreover, new and useful articles which are constantly being brought to attention by active advertisers should be tried whenever they seem likely to create a legitimate demand. The canteen officer, in brief, should not judge for his customers and try to help them save their money, but do his best to help them spend it on what they really want, and to give them the best value for it. The list at the end of this article embodies a good deal of experience in adding and cutting stock items, and though sales vary much on different ships, and at different times on the same ship, it may be taken as a good example of the result of nearly three years' effort along these lines. The quantities indicated for each item constitute an actual experience of approximately what a ship's company of eight hundred men will use in three months away from home ports. Few ships can afford space for so much; but the list as it stands will serve for comparison. At home sales are less, of course. The prices shown are those actually charged in August, 1906, and in no case represent a loss on cost. The notes following the list combine miscellaneous experience which finds no place elsewhere in our discussion.
Policies differ as to the amount and disposition of profits even amongst canteens which are well established. There is undoubtedly a tendency to keep prices up near the retail mark after it is necessary, in order to meet all the numerous calls on the canteen for athletic and entertainment expenses sure to arise when it becomes known that money is available.
The doctrine officially advocated is, I believe, the correct one, that "the monthly surplus should be reduced to a minimum, thus disposing of the regular retail dealer's profit in the most equitable manner possible, 1. e., by giving the benefit of it to each purchaser in the form of a discount." Without the necessity of either paying rent, salary, license, delivery, or other fixed charges the canteen ought to give each purchaser such a discount over the usual retail price of from fifteen to forty per cent.
It is very convenient to have a small fund for amusement expenses. It saves much of the subscription business which is so troublesome aboard ship and which always rests most heavily on the more public-spirited of the crew. Some money will accrue through differences of cent fractions; there is no objection to increasing it further by imposing a small charge over cost of articles of luxury, like cigars and candy, to supply such needs; but it should be distinctly borne in mind that this is the exception, and that cost, not profit, governs the selling price.
Some ships allow bumboatmen to do business on board as well as the canteen. Though traffic with bumboats may be undesirable from the standpoint of discipline, the ship's store's policy should be when permitted, to enter into rivalry with them. Competition with the bumboat is good for more than one reason. It gives a line on prices, often suggests good ideas for stock,—for the bumboatman is expert at reading the crew's desires. Best of all it furnishes daily proof to the men of the benefits of the ship's store, and prevents any feeling against it apt to arise if they are restricted to purchases from it alone. Only one rule need be made with regard to the bumboat. The canteen yeoman should inspect its wares, after the executive has made the necessary disciplinary stipulations, to make any recommendations necessary to prevent the sale of articles competing with the canteen stock but of inferior quality.
Bumboats are often very convenient to use to handle perishable articles like milk, pies, and fresh fruit which, as stock, are more or less speculative in character. Frequently rivals will bid for the privilege of bumboating the ship. What accrues from this source turned into the canteen amounts to an indirect reduction in prices, since the crew as a whole gets the benefit of the gain.
Ideas differ as to the methods of keeping the accounts of the ship's store. A simple system is indicated in the General Mess Manual. It is too simple in fact since it makes no provision for keeping track of orders or liabilities. Personally, I prefer the system sanctioned by use in civil life in similar businesses which includes a set of double entry books: daily blotter, journal, and ledger, an order book, and a stock book. No shop business could be less complex. All patrons pay cash and liabilities are strictly limited to merchandise. Besides the ledger accounts with dealers none are needed except "merchandise," "cash," and "profit and loss." The order book keeps track of current deliveries and the stock book merely of receipts, and expenditures of articles as shown by a double checked inventory taken monthly. This "double check" extends all through the canteen's affairs. Two men (the commissary officer or some one from another side of the pay department work, and the canteen yeoman himself), check all transactions affecting stock: deliveries, inventories, etc. The extra man initials his count and understands he is responsible for its correctness in case of question. The canteen man makes sure of it for his own protection.
Orders are usually placed after bids have been invited. Samples should always be required with each bid to be kept until after the delivery. Award should be made on quality, and then on price.
I find it most convenient to enter all stock at the selling price as soon as received. That is, the profit is taken when the goods arrive and not when sold. This is simply for convenience as it reduces all stock computations to one set of prices. It is justified by the fact that the canteen, unlike shore stores, charges very little profit. Stock on hand at selling prices differs very little from its cost, so that no undue inflation of assets is produced in this way. In any event, in case of wind-up whether held at cost or selling price would make no difference. The stock would then be worth just what it would bring, and no more.
As methods vary, prices vary. Beside the differences necessarily flowing from variations in policy there is a wide difference in the ability to buy. Some men are better purchasers than others though all be equally conscientious. Many tricks in the retail trade need to be learned with experience as the only teacher. It is to the interest of small dealers to have the cost of their goods concealed as much as possible. If in selling they can make a statement, or show evidence as to cost which is within the letter of the truth, but which takes no account of rebates, discounts, and "deals" allowed them, they are glad to take advantage of it. The wholesaler, therefore, employs many ingenious dodges to accomplish this, especially as it helps to conceal his prices from his competitors. It is common for published price lists to be subject to three discounts through which the purchaser has to fight his way. Deals, "open" and "covered" furnish very interesting manifestations of the elaborate structure reared to trap the unwary into paying the top price. An "open" deal is one wherein the lump purchaser gets a certain amount of stock thrown in gratis, with his purchase. For instance, recently the manufacturers of a well-known washing compound gave away an extra case of their goods with every five ordered. The five cases would be billed at the standard price and the sixth one come along on a separate "no charge" bill. Thus the retailer could say his packages cost him so much each; and still sell his sixth case, which cost nothing. A "covered" deal is a still more subtle form of the same sort of transaction. An example is furnished by manufacturers of a popular brand of cigars, who had a certain standard price, say $35 per thousand, which they made the dealer actually pay within thirty days; then every six months they would cast up his account and return him a draw-back check for, say $2.50, for each thousand cigars he had bought during that time. Thus the dealer is permitted to announce he pays three and a half cents each for his cigars when he actually winds up by paying a quarter cent less. It is no wonder then, that one can never be sure of getting the "last price" on a purchase for the canteen though he exhausts his imagination in the effort to see through the middleman's profit.
A difference in markets, also, necessarily affects the price of articles, although not so much as one would imagine in the case of standard items in home ports where broadcast advertising has resulted in a demand which allows the manufacturers to put the price up so near the retail limit that they have to bear freight charges to local depots to leave the small dealer any profit at all.
In the case of ships abroad it is often necessary to pay any price asked to get the home brands of goods the men are accustomed to,—if obtainable at all. This frequently puts the canteen patron serving at the will of the government on foreign station at a disadvantage with his fellow blue jacket more fortunately stationed in home waters. It is a handicap he ought not be made to bear, for if the privilege of buying such items is given at all it is only equitable that prices, of standard articles at least, should be the same wherever men are stationed. No canteen, however, would be justified in the risk of ordering goods sent by freight to foreign station with the movements of our vessels as uncertain as they are; and the surer means of government transportation is not at present generally available for canteen stores.
A minor reason for difference in prices which can be easily remedied is the fact that most ship's stores do business on a five and ten-cent basis. There seems to be a prevalent objection to making change in pennies, though there is no real reason why it should not be as easy as making it to nickels. It takes but a very short time for a canteen yeoman to become accurate at it, as has been proven by going months at a time with a difference, chargeable to errors, of not more than a dollar either way on an average monthly business of nearly two thousand dollars. At any rate it is not possible to have the selling price approach cost unless one does use odd cents for the reason that wholesale packages and prices are usually graded to allow the retailer to make his profit in selling at even nickels.
Some canteens keep to nickel selling and keep down their profits by adjusting prices so that gains and losses will balance when the items are sold out. It is manifest that if one sells one article for ten cents, at two cents loss, and another at the same price with two cents gain, no profit results. But this practice violates the canteen principle that each purchaser should receive the maximum benefit from his purchase, and it is therefore not to be recommended.
Quality differs also. The main reason for this difference in ship's stores is because buying is practically confined to purchases from middlemen. Manufacturers will always "protect the jobbers" as against small dealers, be they ever so shrewd. Neither do they care usually to undertake the trouble and cost of making small deliveries. The result is that the middleman while making his legitimate profit through discounts and rebates is constantly exposed to the temptation of increasing it by offering inferior goods. The only remedy is to buy standard brands in spite of all persuasion, unless there be ample opportunity for test. In every line there are some makers who have established a reputation they are proud to maintain. If their brands are required the contest narrows down to the question of price. A fundamental rule of the canteen finds place here. None but the best plain, quality in food stuffs and toilet articles, and no poor quality of any article should be carried.
All these differences in policy, in price, and in quality manifestly tend to reduce the efficiency of the ship's store service. With stores permitted to be conducted independently of each other, in stock supply, and in all other methods, the results of carelessness or incompetency can go unchecked and uncorrected. Yet dissatisfaction in a ship whose crew sees the store on another in better condition is not always justified. Poor results cannot invariably be laid to such causes. As we have seen, a new vessel begins at a heavy disadvantage to which is often added an entire lack of experience with trade conditions on the station. The critical comparisons made are not always fair when one thinks the whole burden of upbuilding and conduct, often without adequate means, is laid on those who manage the canteen.
It must be admitted, however, that the present system does have one great advantage. Through the very fact that it is not fully subject to regulation an escape from the methods imposed by our out-of-date naval purchase laws is allowed. The business of the canteen can now be done in the way an ordinary business man would conduct it. The commissary officer goes where he pleases for stock and pays what prices may be necessary to secure good quality. To limit this power too much would work a serious injury especially in the case of "trust" articles, which make up a large part of the stock,—whose cheap imitations would be apt to make trouble in any attempt to purchase under general specifications after advertisement. Consideration of the subject of surmounting this and kindred difficulties in case canteens should be maintained with public funds has led to the following suggestions:
In the case of lump purchases originally made at central depots, how might the receipt of undesirable material under advertisement for competitive bids be avoided? To frame specifications for many canteen articles would be impossible without reference to standard brands, which is not permitted. Besides, whatever their quality, there are some things the men want by name, having been accustomed to them, or "educated" by advertising. The store should cater to such demands, but it would be difficult under present practice to fulfill them from original purchases, for every merchant has the right to compete for the business of the government without prejudice. But if the seldom-emphasized rule in competitive purchases be borne in mind, that of the two elements competition in quality is more important even than competition in price, why would it not be feasible to advertise for such stores as necessary with award to be made on the basis of quality primarily? This is now done in the case of certain other stores bought for sale to the service, where there can be no question of loss to the government. In the case of canteen stores, it should be possible to go so far as to advertise for goods to cost a specified unit price delivered. It is believed this is practicable at least for articles whose output is so controlled that the manufacturers' prices are held at unvarying figures. It is recognized that with such a method of purchase certain dangers need be avoided, and that even more rigid care in inspection of samples would be necessary than where the award is largely determined by the price; but on the other hand, it would cut the gordian knot binding our hands to the lowest bidder. Makers of inferior goods would not then think it worth while to compete under such circumstances, and a large number of our most troublesome dealers would disappear.
In such special cases in which it is advisable for the canteen to buy for itself in order to get just what it wants or for any other reason, if a small allotment of cash outright for such uses is not practicable, cash will soon accumulate from sales. Repayment for supplies put on board as with other stores need not be made at once so long as periodical returns from the ship show such repayment as secure. Suppose a ship is furnished with four thousand dollars worth of canteen stores. It is within the province of the administrative officers to permit the use of the proceeds of sales of such stores, under proper restraint, for the further purchase of supplies in unusual cases, and by the less rigorous, but equally safe, methods used in other ship purchases. In case of doubt as to this power it could be assured by the issue of a Presidential order as suggested in the January issue of the NAVAL INSTITUTE placing purchases made with canteen funds under Sec. 1549 R. S., which gives him authority, "to make such regulations for the purchase. . . . of all articles, stores, and supplies for persons in the navy as may be necessary for the safe and economical administration of that branch of the public service."
However regulated the conclusion is inevitable, that some latitude would have to be left the canteens in using funds resulting from sales. Often it would be impossible to get supplies in time, if at all, from the nearest depot. Local markets, especially abroad, sometimes can furnish articles more cheaply than they can be bought at home. Souvenirs cannot be bought usually away from a particular port. Perishable stores, too, are sometimes advisable for stock. Therefore, in any plan, provision will have to be made giving power to the commissary officer to use at least a certain percentage of monthly sales for local needs. The option should also be given the ship to charge a very small profit on certain specified articles of luxury, to provide for unavoidable losses, amusements, and other minor expenses properly chargeable to the store.
This somewhat extended discussion of the requirements and the impediments of a government-supported canteen is advanced with the idea that a general commissary system for the navy is much needed. Many men in the service do not have the privilege of access to a canteen, though with as much right to it as those who have. Numerous officers, too, as well as families of men and officers, do not have opportunity to purchase at cost the many common articles it contains. Once established the vista opens of an added function at shore stations, like the present army commissary, as purveyor of all sorts of household as well as personal articles. What this means to us all I have attempted to show approximately by comparing canteen with ordinary retail prices in the list below. A unit of each item of stock would result in a purchase from the ship's store amounting to $26.28. The same articles would cost in the usual city retail stores $33.38. There is, therefore, a difference of $7.10, or a saving in per cent in favor of the canteen of more than 21 per cent. It must be remembered that this does not represent the total possible difference; for, bought in bulk, many of the canteen prices would be slightly lowered.
It has been calculated recently that the living expenses of the average family man, in moderate circumstances, as separate from his rent and expenditures for clothing and luxuries, may be estimated at least at 30 per cent of his income. If this be true of navy men, with the above figures a maximum of 21 per cent could be saved on such living expenses, which would be tantamount to an increase in income of 6.3 per cent. However correct these computations may be it is certain we could be much in pocket if we could always deal at such a store for the commodities whose mounting cost is so perceptible.
A need defined is half supplied. Given concerted determination to find them and means will not long be lacking to organize a ship's store system for the navy. When found the whole service will say, Hail! to him who shall give it form.
NOTES.
Never let stock run out and disappoint people who have a right from published lists to expect to get what they ask for. At home a little foresight and watching of stock can accomplish this. Nothing is a surer index of the character of the store's administration or creates more comment favorable, or otherwise, than the way stock is kept up. If unavoidably caught any reasonable expense in telegraphing and delivery by express is justified.
In foreign ports inquiry should be made to discover any native products obtainable more cheaply than at home. Coir brushes in the Mediterranean and cigars in the Caribbean illustrate this.
It is to be remembered that ship's mail when in foreign ports is forwarded with United States postage, and that before sailing away from home an ample supply of American stamps should be laid in.
After the canteen is well established special lines of stock for which there is no regular demand may be taken up for two weeks at a time. Preference should be given to articles which usually have to bear a large percentage of fixed charges like those sold in shops necessarily elaborately fitted and in locations where rent is high. For instance, watches with chains, fobs, clasp pins, etc., have to be sold at a great advance over jobbers' cost to cover expenses. They can be sold from ship's store for cost if provision is made for return in case of no sale and a deposit of the price is required at the time of order.
A modified form of circulating library can easily be maintained. Cloth-bound books regularly purchased if returned in good condition can be exchanged for others on payment of a small additional amount for the exchange. A standing order should be placed with a news agency for the supply of current periodicals. Men buy them eagerly.
"No credit sales" should be an inflexible rule from the day the canteen opens. By adhering to it, many errors and small losses will be avoided. All losses and breakage should be verified at the time of occurring on being reported by the canteen yeoman to the pay office.
Always have a canteen list posted in full view in order that purchasers may check prices charged. A canteen bulletin board on the main deck for notices is very convenient. It is better to order stock frequently where possible than to run any chance of its deterioration. This applies to candies, cakes, articles with rubber in them, like garters, and those liable to rust.
It is well to make up the monthly statement of the canteen a few days before pay day when sales are at their minimum, instead of at the end of the calendar month. The congestion of work in the pay department at the end of the month is somewhat relieved by doing this.