Country Auction Modernized

Pa Turnpike

Only a decade ago, the Quakertown exit of the Pennsylvania Turnpike made possible a quick trip from the city to the country, letting you off in the cornfields between Sumneytown and Lansdale. Today, the rush hour traffic is as bad as anywhere else, even on the four-lane express highway known as Forty Foot Road. A comfortable two-lane highway would be about forty feet wide, so presumably the name denotes what was once a modern miracle of a two-lane highway, in this case until quite recently. It's all built up for miles, but almost all the commercial buildings are new. Exurban sprawl has positively lurched across the landscape, making prosperous people rich, and poor people prosperous. It won't be long before the housing subdivisions demand traffic signals to protect the school children, speed limits to reduce the collisions by teenagers, and other things destined to bring high-speed travel to a crawl, all day long. When that happens, it won't be called farm country any more.

Alderfer Auction Company

On Fairground Road, where occasionally corn is still growing, a number of large new commercial enterprises have located, among them a moving and storage company with ten or so truck loading platforms in the back. Behind that is another large new building, also with a parking lot for fifty or so cars, the auction house. Different categories come up for auction on different days, so used furniture for example comes up every few weeks, and has to be stored as things accumulate for the big day. With a moment's thought, you can easily see why the auction is affiliated with or owned by a moving and storage company. As you go through the entrance, you are invited to sign up and identify how you plan to pay, just in case you buy something; the product of this registration is a card with a number in big colored letters. That's your number, your payment arrangement, and soon you will find no one cares anything about you except that number. The auction I was interested in was for used books, one of three or four auctions conducted in different rooms. Nearly a hundred people had numbers for used books, maybe a similar number for antique furniture and paintings. Obviously, one other purpose of the registration process is to create a mailing list of customers interested in various objects, possibly linked to a program which sends out flyers and announcements. Country auctions have always been a source of local entertainment, so non-buying spectators are able to come and watch if they wish. In fact, there seem to be few if any casual sight-seers; just about everybody is a buyer, or a potential buyer. Players, as they say.

Auctioneer

Most of the customers probably set their alarm clocks for 5 AM or earlier; the auction is centrally located, but most everybody comes from a considerable distance. At 9 AM, very promptly, the auction begins, and from his manner you can tell the auctioneer is anxious to get started. The objects for sale have been on display for a day, but most people arrive around 7 AM to examine the goods, which are frequently sold in lots, meaning a boxful of thirty or forty books more or less on the same topic. At the stroke of nine, the auctioneer chanting begins, "Do I have ten dollars, yeh, ten, ten, ten, five, five, ten, fifteen, twenty, twenty, sold for fifteen. Your number, sir?" Two assistants take down the customer number, and the lot number, and the price; one of the two assistants records the transaction in a computer, the other on a list by hand. One gathers the man without a computer is on the look-out for shills, people trying to bid up the price without getting stuck for a purchase. The auctioneer repeatedly assured the audience that no one but a real bidder was allowed to bid, and cautioned the group they were supposed to know what they were doing. If you make a bid, you own it, and no excuses about being confused. When he reached the hundredth sale, this one stopped for a drink of water, and proudly noted the first hundred sales took thirty-seven minutes. It required four other assistants to fish out the lots next in line, holding them up for confirmation only, since inspecting them at a distance was out of the question. After each sale, the assistant dumped the prize in the new owner's lap.

Auction Paddle

By 1 PM on this particular day, seven hundred lots had been sold, at least five thousand books. After every hundred sales, our leader took a drink of water and made a pleasantry or two, but he was otherwise all business. About two hundred of the sales were handled by a substitute auctioneer, who looked to be twenty years old, but talked faster than any human being is supposed to talk, affecting a rasping quality of chant. As it came time for him to take over, he paced nervously near the microphone, and started chanting the moment it was decent to do so. Obviously, these people love what they are doing, and have remarkably retentive memories. On several occasions, a buyer had to fumble for his card number, and the auctioneer remembered what the number was before the card was found. New cards are issued every day. Although they were quite brusque about people who made bidding mistakes, on a couple of occasions the auctioneer had been slow in turning the lot number sign in front of him, so the bidding was repeated. The bidding stopped at the same price point, the second time around. It seems to confirm what libertarians praise so highly about the wisdom of the marketplace; the market price is as close to the "right" price as you are going to get.

You are nevertheless entitled to wonder a little at some of the unexplained market inefficiencies. The ordinary run of books thirty or forty years old will sell for between ten and twenty dollars. Books about golf, just about any old book about golf, "go" for about forty dollars. Children's books are about sixty dollars. And, to my own great surprise, boxes or albums of old photographs go for over a hundred dollars. A lady next to me excitedly brought an album of old photos back to her seat and thumbed through them. "Are you a dealer?" Yes. "Who buys this stuff?" I don't know, they come in my store and just buy it. Like the auctioneer, she had an acute feeling for what the retail price would be, made a calculation, and knew what she could afford to pay wholesale. What the stuff actually represented, why people wanted it, what was a good one and what was a bad one -- these people in the trade had very little idea, and could care less. But they know very precisely what a fair price would be. The auctioneer starts with a low price and tries to bid it up; the retailer starts with a maximum price in mind, and gradually lowers it until it sells; it is the community of buyers who set the price amongst themselves, and the seller has agreed to abide by it. Fun. Lots of fun. When a familiar insider makes a mistake and pays too much, the others laugh heartily at him. Why this funny system works so well has long been a mystery, but everyone except a socialist readily acknowledges it does work. At least it works better than any known substitute, except perhaps for the middle-man cost.

Although the ritual of the country auction has been essentially unchanged for centuries, it is just another transaction system. In the past fifty years, world economy has been transformed by computerized efficiencies in transaction systems, with vast prosperity resulting from small savings endlessly repeated. Banking and Wall Street have standardized most transactions, bundling them in perfectly astounding volume; lots and lots of people have become immensely rich for producing small efficiencies in high volume. Those of us who have not become immensely rich can easily appreciate trivial innovations which resulted in wealth, and so we easily sense the unfairness of old photos worth more than books of poetry. After all, the country auction is still grossly inefficient; the seller pays the auction company 20% of the price, and the buyer pays another 10%. There's 3% for the credit card company, and 7% for the sales tax. Forty percent of this transaction is going to the middle man, over and over and over again. The goal is to reduce transaction costs to the level of Wall Street, considerably less than one percent, which still buys lots of yachts for middle men. When you think about the whole process, it is not one of determining what is fair, or true value. It is to detect what is in the mind of the public as a market-clearing price. That somehow includes the middle-man cost, and adjusts for it, too.

As you walk out of the country auction, it doesn't take a mathematical genius to multiply thirty percent times the number of transactions, times a guess at the average sales price. No wonder these auction people are so cheerful, so much in love with their work. But two other parties are cheerful, too. That is, the willing buyer, and the willing seller.

(1719)