The Great A&P and the Struggle for Small Business in America (47 page)

7: THE ECONOMY STORE

1
. Avis H. Anderson,
A&P
, 48, 50, 63.

2
. On the source of Edward Hartford’s invention, see Ruth Reynolds, “Spotlight Hits Shrinking Hartfords,”
New York Sunday News
, January 9, 1938. The Reynolds article contains numerous inaccuracies, and further detail is available at
www.planetspring.com/pages/04_history.htm
, accessed August 29, 2009. The original device was developed by Jules Michel Marie Truffault, an engineer in Paris, but Edward and George H. Hartford acquired the rights in 1903; see U.S. patents 743,995, issued November 10, 1903, and reissue 12,399, dated November 7, 1905. George H. seems to have held a 49 percent stake in the business. Edward’s improvements were protected by patent 803,589, issued November 7, 1904, and subsequent patents. John A. Hartford’s involvement in the auto-parts company is unknown, but he served as a witness on a 1910 patent application filed by Edward; see patent 1,124,612, issued December 10, 1910. The Hartford Shock Absorber was advertised with the slogan “Makes Every Road a Boulevard” in
The Automobile
, December 30, 1915, 220. Edward apparently liked to write about automotive technology as well as developing it; see his article “What Is a Rotary Motor?”
Automobile
, November 11, 1915, 879.

3
. Letter is quoted in “O.W.S. Biography Notes from 1875–1889,” HFF. The National Horse Show, opening the day after Election Day in November, started in 1883 and quickly became one of New York’s premier society events. The newspapers provided ample coverage not only of the competitions but also of the society luncheons, dinners, and late-night suppers that surrounded the event. For a brief history, see “National Horse Show on Nov. 5 to Inaugurate Formal Entertaining of Society in the City,”
NYT
, September 25, 1938. Mr. and Mrs. J. A. Hartford are listed in
Dau’s Blue Book
for 1914 (New York, 1914), 154. John was a member of the National Tea Association.

4
. Pennington, “Relation of Cold Storage,” 158.

5
. On Taylor, see Kanigel,
One Best Way
, 370–74, 440. Barger contends that the average retail markup in the grocery industry expanded from 35.5 percent in 1899 to 38.1 percent in 1909; see
Distribution’s Place
, 70. King, “Can the Cost of Distributing Food Products Be Reduced?” 206; “Reducing the Cost of Food Distribution,”
Annals of the American Academy of Political and Social Science
50 (1913). On peddlers, see Deutsch,
Building a Housewife’s Paradise
, 28–31.

6
. A Chicago wholesaler proposed to create a new retail chain on scientific principles in 1911; see
AG
, June 24, 1911, 7. The only available reference citing the address of this store is “Background Material on John A. Hartford and the A&P,” binder 1, HFF. See comments of the A&P executive O. C. Adams, who had helped launch the Economy Store, in Progressive Grocer,
A&P: Past, Present, and Future
(New York, 1971), 18; Bullock, “History of the Great Atlantic & Pacific Tea Company Since 1878,” 66; “Red Circle and Gold Leaf,”
Time
, November 13, 1950.

7
. In 1914, the average Economy Store booked sales of $18,159, whereas the average “traditional” Great Atlantic & Pacific store had sales of $50,845. “Stores and Dollar Sales (Fiscal Years),” notebook 8B, HFF; Bullock, “History of the Great Atlantic & Pacific Tea Company Since 1878,” 67.

8
. FTC,
Chain Stores: Growth and Development of Chain Stores
, 56; Paul Gaffney, “Dime Stores/Woolworth’s,” St. James Encyclopedia of Pop Culture,
findarticles.com/p/articles/mi_g1epc/is_tov/ai_2419100342/
, accessed July 26, 2009.

9
.
AG
, September 15, 1909, 28; December 8, 1909, 12;
Bobbs-Merrill Co. v. Straus
, 210 U.S. 339;
Dr. Miles Medical Co. v. John D. Park and Sons
, 220 U.S. 373.

10
. On the tobacco premium measure and mail-order merchants, see letters from independent merchants in RG 233, Records of the U.S. House of Representatives, 62nd Cong., Papers Accompanying Specific Bills and Resolutions, Committee on Interstate and Foreign Commerce, HR62A-H14.21, box 646, NARA-LA.

11
. Marc Levinson, “Two Cheers for Discrimination: Deregulation and Efficiency in the Reform of U.S. Freight Transportation, 1976–1998,”
Enterprise and Society
10 (2009), 178–88; comment of John A. Green cited in
Printers’ Ink
, May 28, 1914, 92.

12
. Wilson’s comment is cited in Retail Grocers Protective Union of Pittsburgh and Vicinity to John M. Moran, n.d., RG 233, Records of the U.S. House of Representatives, 63rd Cong., Petitions and Memorials, Committee on Interstate and Foreign Commerce, HR63A-H12.16, box 465, NARA-LA. Wilson had long been suspicious of big business, having written as early as 1898 that “the modern industrial organization has so distorted competition as sometimes to put it into the power of some to tyrannize over many.”
The State
, rev. ed. (Boston, 1918), 61.

13
. The case,
Bauer v. O’Donnell
, 229 U.S. 1, made clear that even the owners of patents could not control the prices at which patented goods were sold to the public; Louis D. Brandeis, “Competition That Kills,”
Harper’s Weekly
, November 15, 1913. McCraw,
Prophets of Regulation
, 102–105.

14
. U.S. House of Representatives, Committee on Interstate and Foreign Commerce,
To Prevent Discrimination in Prices and for Publicity of Prices to Dealers and the Public
(Washington, D.C., 1915), 3–4.

15
. For Westerfeld, see ibid., March 13, 1914, 258; Elmer L. Ralphs (vice president, Ralphs Grocery Company) to C. F. Curry, September 4, 1914, RG 233, Records of the U.S. House of Representatives, 63rd Cong., Petitions and Memorials, Committee on Interstate and Foreign Commerce, HR63A-H12.16, box 465, NARA-LA. Brandeis’s testimony is in
To Prevent Discrimination
, January 9, 1915, 14.

16
. Charles W. Hurd and M. Zimmerman, “How the Chains Are Taking Over the Retail Field—IV,”
Printers’ Ink
, October 8, 1914, 36–37; “Taking the Chains by Fields and Their Number in Each—V,”
Printers’ Ink
, October 15, 1914, 71–72.

17
. Charles W. Hurd and M. Zimmerman, “How Big Retailers’ Chains Outsell Independent Competitors—XI,”
Printers’ Ink
, December 3, 1914, 66; “How Accounting Helps the Chains Outbattle the Independents,”
Printers’ Ink
, December 17, 1914.

18
.
To Prevent Discrimination
, 89.

19
. 38 Stat. 730, secs. 2 and 3. Members of the House Committee on Interstate and Foreign Commerce noted that while small retailers and wholesalers wanted to let manufacturers fix retail prices, manufacturers themselves evidenced little interest in the subject; many of them happily sold in quantity to chains. Charles W. Hurd and M. Zimmerman, “Why Advertisers and Dealers See Danger in Chain Stores,”
Printers’ Ink
, September 17, 1914, 68.

20
.
Macon Daily Telegraph
, January 13, 1915;
Fort Worth Star-Telegram
, January 20, 1915.

21
. Bullock, “History of the Great Atlantic & Pacific Tea Company Since 1878,” 67;
Great Atlantic & Pacific Tea Co. v. Cream of Wheat Co.
, 224 F. 569.

22
.
Great Atlantic & Pacific Tea Co. v. Cream of Wheat Co.
, 224 F. 574. When Great Atlantic & Pacific appealed Hough’s decision, it received an even more stinging rebuke from the appellate judges: “We have not yet reached the stage where the selection of a trader’s customers is made for him by the government”; 227 F. 49.

23
. E. A. Bradford, “Price Cutting and Price Fixing,”
NYT
, August 15, 1916. Among the fierce intellectual defenders of manufacturers’ right to fix retail prices was a young graduate student named Sumner H. Slichter, soon to be one of the nation’s most prominent economists, who contended that “price maintenance is not an
aggressive
device, but on the contrary it is a
protective
device.” “Cream of Wheat Case,” 411.

24
. Repurchases of preferred shares are listed in “New Jersey Co. Transfer Journal,” HFF.

25
. The offer notice for the bond issue appeared in
WSJ
, June 15, 1916. Orders for the bonds “largely exceeded the amount offered”;
NYT
, June 16, 1916.

26
. Robert D. Cuff, “Creating Control Systems: Edwin F. Gay and the Central Bureau of Planning and Statistics, 1917–1919,” 590–95; Kennedy,
Over Here
, 113–16.

27
. FTC,
System of Accounts for Retail Merchants
.

28
. Avis H. Anderson,
A&P
, 39; “Bonuses for A&P Store Managers,”
NYT
, March 9, 1917.

29
. “O.W.S. Biography Notes from 1875–1889,” HFF; J. C. Furnas, “Mr. George & Mr. John,”
Saturday Evening Post
, December 31, 1938, 38.

30
. “George H. Hartford,”
NYT
, August 30, 1917.

31
. Will of George H. Hartford, April 7, 1915, and codicil, June 23, 1916, Office of the Surrogate, Essex County, N.J., Will Book T-5, 171–73; Avis H. Anderson,
A&P
, 46.

32
. Helen Zoe Veit, “‘We Were a Soft People’: Asceticism, Self-Discipline, and American Food Conservation in the First World War,” 167–70; U.S. Food Administration,
Proclamations and Executive Orders by the President Under and by Virtue of the Food Control Act
(Washington, D.C., 1918), 3, 7, 14.

33
. In 1918, the Federal Trade Commission recommended that companies be allowed to file proposed prices with an unspecified government agency; the agency could reject or revise any proposed price, but if it approved it, then all retailers would have to charge the approved price. The recommendation did not result in action. FTC,
Resale Price Maintenance
; U.S. Food Administration, “Official Statement No. 1,” June 16, 1918, 4; “Official Statement No. 5,” October 1, 1918, 16; “Official Statement No. 6,” November 1, 1918, 29; and “Official Statement No. 7,” November 15, 1918, 18. Some government officials exhorted citizens to do far more than regulations required; in January 1918, for example, the Food Administration’s chief official in Indiana asked that state’s citizens “to go on a strictly wheatless diet until after the next harvest,” and in April 1918 Indiana retailers were enjoined to sell no more than two pounds of sugar to “town customers” and no more than five pounds to “country customers.”
Indiana Bulletin
, April 5, 1918, 3, and June 28, 1918, 5. Price regulation of sugar remained in effect until 1920. McHenry, “Price Stabilization Attempts in the Grocery Trade in California,” 124, asserted that Food Administration regulations replaced the demand for resale price maintenance during 1917 and 1918, but this connection seems weak, given that the regulations were not imposed until the waning days of the war.

34
. Sears, Roebuck, then strictly a mail-order house with no branches, was the largest retailer in the United States, and probably in the world, for the second decade of the twentieth century. However, Sears’s sales began to slump in 1920 as the company headed into a financial crisis. Information about individual retailers’ sales in this period is fragmentary and, in the case of certain companies, subject to frequent revision. The following ranking of the world’s largest retailers in 1920 was compiled from published sources:

8: THE CHAIN-STORE PROBLEM

1
. Barbara McLean Ward, “Crossroads of a Neighborhood in Change: The Abbotts’ Corner Store,” in Ward,
Produce and Conserve
.

2
. Shideler, “Chain Store” (Ph.D. diss.), chap. 4, 20. At the time, Chicago had a population of 2.7 million and an average of 4.34 people per household, yielding 622,120 households. U.S. Department of Commerce,
Census of Distribution: Atlanta, Georgia
, mimeo, October 16, 1927.

3
. Writing in 1931, Carl W. Dipman described an ideal grocery store as being 40 feet deep and 18 to 30 feet wide, or 720–1,200 square feet;
Modern Grocery Store
, 23. Of the 585,980 food stores in the United States in 1929, including 104,089 general stores selling food, 58 percent were leased. For grocery stores, the average rent was $708 per year. General stores showed a different pattern, presumably because of the low cost of property in rural locations; 70 percent of them were in premises owned by the proprietor, and those in leased premises paid an average rent of only $471 per year;
1930 Retail Census
, 49. A 1924 Harvard Business School survey revealed an average annual rent of $948, or $79 per month, but this survey undersampled the retailers with the lowest turnover, who likely also paid the lowest rent. See Bureau of Business Research, Harvard University Graduate School of Business Administration,
Operating Expenses in Retail Grocery Stores in 1924
, 37. See the description and photograph of Sun Grocery, which opened in Tulsa, in 1926, in Wilson,
Cart That Changed the World
, 34–35.