Sunday, May 17, 2009

What this blanket cost . . . and the beat goes on

Having established the wholesale price of 5s (five shillings) for a single blanket, what would the actual cost be, say in Grand Portage, Fond du Lac, Athabasca, and so on.

As any business knows, the factor in determining price (besides desiring to provide room for profit) is "overhead". In the case of our blanket heading into Upper Canada and the Northwest ("Northwest" being anything "Midwest" nowadays from Ohio through what is now Minnesota, the Dakotas, and into Canada), overhead was figured on the cost of goods at Grand Portage (or Kaministiqua later, or Rainy Lake) plus equipment items for personnel and interest. Two different interest items are noted in at least on account in 1801 (H. Innis, The Fur Trade in Canada, p. 243; Coues New Light I, 4 and 200-1): interest on goods for the year plus last year's inventory, plus an interest percentage added which included the previous year. To all this is added the cost of freight to carry the furs back to Montreal and wages.

More specifically, overhead included: personnel wages (the proprietor, interpreter, and clerk), transportation which included the wages of the voyageurs to and from posts and Montreal (the men paddling canoes, lugging goods across portages), the cost of the canoes, any tariffs/duties/fees/licenses, interest on goods (both current and carried past year), the costs of upkeep of the Grand Portage depot and particular post, gifts, spoilage, the "outfit" given to each employee each year, and so on.

This latter cost, the clothing and equipment given to each man, was more than off-set by the fact that wages were for the most part paid in goods (Innis, pp. 240 ff, footnotes). And given daily necessities of the men (clothing worn out, tobacco and alcohol, and so on) and the inability to bring much in the way of possessions west, goods were often "advanced" to the extent that wages were never paid. In fact, many men owed years worth of service after a single "tour of duty" (Innis).

Figuring out what the actual overhead for individual items was is nearly impossible, though some educated guesses can be made. A few examples suffice:

1. The 1797 Grand Portage inventory indicates a pair of 2 1/2 point blankets as worth 14s. This would make the individual blanket worth 7s, a markup of 2s or 40%.

40% seems a bit high, though the rate was probably variable depending upon the year, the rate of return on furs, competition, and so on. This variability lead to the NW Co. establishing, in 1804, a rate of increase or "tariff" to be assigned to calculate the freight and "advance" on price westward.

At Kaministiquia (what became called Fort William), in 1804, the advance in price was deemed to be 23% on the Montreal "Cost of all Goods without reserve." (NW Co. minutes, in Can. Archives, Innis, and Wallace Documents)

This would put the price at Fort William of our 5s blanket (more like 5s 3d, five shillings 3 pence by 1804) at 6s 1+d.

2. Zebulon Pike noted (Expeditions of, ed/ Coues I, 283), in 1805, what he was lead to believe was the markup on goods between Montreal and places west: 250% at Fond du Lac (2.5 times the cost or 12s 6d).

Other sources (La Rochefoucault in La Rochefoucault-Liancourt's Travels in Canada 1795, p. 115) indicate a 3 times advance in Detroit, 4 times in Michilimackinac, 8 times at Grand Portage, 16 times at Winnipeg, all on the usual value at Montreal.

The two examples, Pike and La Rochefoucault, I believe, indicate more of a "retail" price markup (including profit for the merchant) rather than reflecting a simple overhead cost markup. But they still give some idea of what needed to be factored into the cost of this blanket as it headed west for trade in exchange for furs.

Therefore, let us take 7-9s at Grand Portage, as our base wholesale price (which includes overhead to GP) for a 2 1/2 point blanket. This blanket traded, usually for 3 (sometimes later 4) beaver pelts.

What was the cost to the Native trappers on this basis, and what return did the 5s, now 7-9s blanket bring?

Next time.

The Clerk

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