The Great A&P and the Struggle for Small Business in America (54 page)

15
. “Charts, Presidents’ Meeting, February 9, 1928,” box 67, Danville trial files; Dx 283, box 66.

16
. Dx 507, box 66; Rentz, “Death of Grandma,” 47.

17
. Dx 433, box 66; Dx 504, box 66; Gx 162, Tr 738; Dx 450, box 66.

18
. Dx 254, box 66; Dx 517, box 66; Dx 259, box 66.

19
. Much Safeway correspondence of this sort is in RG 60, General Records of the Department of Justice, Antitrust Division, Enclosures to Classified Subject Files, 1930–87, Class 60 enclosures, box 72, NARA-CP.

20
. Gx 2683, Tr 9654; Dx 683, box 66; Gx 2754, Tr 9894; Dx 341, Tr 16393; Tr 20451. In January 1937, John demanded the immediate firing of an assistant superintendent after learning that a store in Buffalo had sold “18 or 20 items” below cost; see Dx 1017, box 66.

21
. Dx 286, 287, 289, 290, 291, 293, 294, 296, 298, 299, 301, box 66.

22
. Dx 302, box 66.

23
. On the disregard of return on investment as a performance measure, see the testimony of A. G. Hoadley, president of the Middle Western Division, at Tr 15136. See also Gx 218, Tr 965. John’s appeal failed; at the end of fiscal year 1940, A&P showed earnings of $7.92 per share.

24
. Adelman,
A&P
, 454; “Chain-Store Gains Laid to Attacks,”
NYT
, January 2, 1940.

19: THE TRUSTBUSTER

1
. Patman to Flynn, May 15, 1941, box 82(c), WPP; Caro,
Years of Lyndon Johnson
, 675–740.

2
. Gressley,
Voltaire and the Cowboy
, 19.

3
. Brinkley, “Antimonopoly Ideal and the Liberal State,” 559; Gressley,
Voltaire and the Cowboy
, 269.

4
. Arnold,
Folklore of Capitalism
, 212; Miscamble, “Thurman Arnold Goes to Washington,” 5–8. For critiques of Arnold’s realism, see Kesselman, “Frontier Thesis and the Great Depression,” 266, and Gressley, “Colonialism,” 72.

5
. There is an ample literature on the Roosevelt administration’s antitrust policies in the late 1930s. See, among many other sources, Hawley,
New Deal and the Problem of Monopoly
; Hofstadter,
Age of Reform
, 314–22; Leuchtenberg,
Franklin Roosevelt and the New Deal
, 148–50; Gressley, “Thurman Arnold, Antitrust, and the New Deal,” 230–31; Edwards, “Thurman Arnold and the Antitrust Laws”; Waller, “Antitrust Legacy of Thurman Arnold.”

6
. “Memorandum for Assistant Attorney General Antitrust Division: General Outlines of the Food Investigation,” June 13, 1940, reprinted in Arnold,
Bottlenecks of Business
, 225. Arnold’s comment is at 239.

7
. Copies of the pamphlets are in RG 56, General Records of the Department of the Treasury, Central Files of the Office of the Secretary, box 134, NARA-CP. “Byoir ‘Exoneration’ Is Hit as Too Hasty,”
NYT
, July 22, 1940; “Byoir, Publicity Man, Called Nazi Agent, Assails Patman,”
Washington Post
, August 30, 1930; Patman’s appointment books are in WPP, box 1705.

8
. On the Connecticut case, see “Grocers Indicted as Price Fixers,”
NYT
, May 24, 1941. The cheese indictment,
U.S. v. Great Atlantic & Pacific Tea Co. et al.
, Criminal 11-345, Southern District of New York, September 25, 1941, is in box 66, Danville trial files; see also “Price-Fixing of State’s Cheese Laid to 2 Big Concerns, 90 Others,”
NYT
, September 26, 1941. On the bread case,
U.S. v. Great Atlantic & Pacific
, U.S. District Court for the District of Columbia, Criminal 67845, see Tr 85.

9
. “Memorandum for the Federal Bureau of Investigation,” December 4, 1941, RG 122, Records of the Federal Trade Commission, Bureau of Economics, Office File of Roy A. Prewitt, box 6, NARA-CP; “Food Groups Fined in Connecticut Case,”
NYT
, November 4, 1941; “Fines Are Assessed in 2 Cheese Cases,”
NYT
, September 7, 1944; “Acquitted in Bread Price Suit,”
NYT
, March 20, 1942; “Food Monopolies Held to Be Waning,”
NYT
, September 16, 1941. This evidence of Thurman Arnold’s ambivalence about antitrust enforcement, as demonstrated by his division’s simultaneous attacks on price-fixing and price competition, is at odds with the widely held view that he had a “comprehensive antitrust program,” as asserted by Miscamble, “Thurman Arnold Goes to Washington,” 14. Corwin Edwards, Arnold’s chief economist, went so far as to assert in 1943 that the antitrust division had become the “special custodian of the interests of consumers, small businessmen, and other victims of monopoly and restraint of trade,” without acknowledging that the interests of consumers and small businessmen were often at odds; see “Thurman Arnold and the Antitrust Laws,” 354. On commodity agreements, see Wells,
Antitrust and the Formation of the Postwar World
, 69.

10
. “A&P Gives Part Pay to Its Service Men,”
NYT
, December 31, 1940; “Need for Reducing Cost of Distribution Greater Because of War, Says Hartford,”
NYT
, January 2, 1941; “A&P Pays More to Produce Trades,”
NYT
, March 18, 1941.

11
. “A&P Gives 5-Day Week,”
NYT
, April 29, 1941; “A&P Sales at Top; Profit Rate Drops,”
NYT
, June 27, 1941; “A&P Pays Men in Service,”
NYT
, November 25, 1941; “Bonuses Announced,”
NYT
, December 5, 1941; “A&P Backs Curbs on Price of Food,”
NYT
, December 31, 1941.

12
. William R. Watkins (special assistant to the attorney general) to Food Chain Staff, memo, February 6, 1942, RG 122, Records of the Federal Trade Commission, Bureau of Economics, Office File of Roy A. Prewitt, 1939–60, box 6, NARA-CP. A&P estimated the government took 100,962 documents from its files, whereas the government’s count was 87,577; see Affidavit of Alma Hawkes, secretary to Caruthers Ewing, in RG 21, Records of the U.S. District Courts, Records of the U.S. District Court, Eastern District of Illinois, Danville Division, Criminal Records, Criminal Case Files, box 149, NARA-C. Patman’s lunch with Arnold appears on Patman’s calendar; see box 1705, WPP.

13
. “Report of Progress of Food Chain Investigation, March 30, 1942,” 1/9, 2/1, 3/3, 2/10, 2/11, 1/4. Collection of thirty thousand to fifty thousand documents was cited in
U.S. v. New York Great Atlantic & Pacific Tea Co.
, 52 F. Supp. 683 (N.D. Texas).

14
. Wells,
Antitrust and the Formation of the Postwar World
, 80–81; Brinkley, “Antimonopoly Ideal and the Liberal State,” 577.

15
. Dx 991; Dx 993. The Federal Trade Commission, which had legal authority separate from that of the antitrust division, proposed in 1942 to punish A&P for unfair treatment of Washington state apple growers, but it rescinded the order after acknowledging that A&P was entitled to the lowest prices for paying cash. Arnold’s lawyers were unmoved. FTC docket 3344.

16
. Indictment,
U.S. v. New York Great Atlantic & Pacific Tea Company
, case 10512 (Criminal), N.D. Texas, November 25, 1942;
U.S. v. New York Great Atlantic & Pacific Tea Co.
, case 10603, 137 F.2d 459 (5th Cir., July 30, 1943), rehearing denied September 1, 1943. On the local A&P, see “New A&P Super-store Opens Here,”
Danville Commercial-News
, September 22, 1938.

17
. “U.S. vs. A&P Company,”
Danville Commercial-News
, April 28, 1945; Report of Pretrial Conference, box 149, Danville trial, NARA-C; “86 Days of A&P Anti-trust Trial Cost Estimates $2,000,000—and That’s Not All!”
Danville Commercial-News
, October 21, 1945. The Justice Department subsequently filed antitrust suits against Safeway and Kroger as well, but these were much smaller in scope and far less complex to try.

18
. Tr 20432; “Exhibits Pile Up in A&P Trial; May Pass 4,000,”
Chicago Tribune
, July 1, 1945; “Crowd Fills Court to See John Hartford,”
Chicago Tribune
, October 24, 1945; “Lindley Denies Motion to Rule Out 250,000 Documents in A&P Case,”
Danville Commercial-News
, April 16, 1945; “A&P Anti-trust Trial to Resume in Federal Court,”
Sunday Commercial-News
, September 16, 1945; “A&P Defense Rests Case as Hartford Defines Profit,”
Danville Commercial-News
, October 24, 1945.

19
. Gressley,
Voltaire and the Cowboy
, 54.

20
. For an overview of thinking about vertical integration in the 1940s, see G. E. Hale, “Vertical Integration: Impact of the Antitrust Laws upon Combinations of Successive Stages of Production and Distribution,”
Columbia Law Review
49 (1949), 921–54.

21
. Tr 2798; Tr 5725–33; Dx 706.

22
. “Brief for the United States,” 854, Danville trial; Tr 20618.

23
. Dx 577; 67 F. Supp. 655, 657.

24
. Tr 20825.

25
. Tr 20825; Gx 314; Adelman,
A&P
, 438; Tr 17202–4.

26
. 67 F. Supp. 636, 641; Final order, September 27, 1946, Danville trial.

27
.
U.S. v. New York Great Atlantic & Pacific Tea Co.
, 7th Cir., case 9221, February 24, 1949, 173 F. 2d 88.

28
. L. A. Warren (president, Safeway) to Lawrence Giles (Safeway’s attorney with Chadbourne, Hunt, Jaeckel & Brown, New York), March 15, 1937, and L. Giles, “Memorandum Regarding Safeway Stores, Incorporated,” April 7, 1937, both in RG 60, General Records of the Department of Justice, Antitrust Division, Enclosures to Classified Subject Files, 1930–87, Class 60 enclosures, box 71, NARA-CP.

29
. M. A. Adelman, “The A&P Case: A Study in Applied Economic Theory.” The dissertation was later published in revised form as
A&P: A Study in Price-Cost Behavior and Public Policy
. Joel B. Dirlam and Alfred E. Kahn, “Antitrust Law and the Big Buyer: Another Look at the A&P Case”; M. A. Adelman, “Dirlam and Kahn on the A&P Case”; Fulda, “Food Distribution.”

30
. The antitrust division’s budget increased from $432,000 in 1938, the year Arnold took over, to $2.3 million in 1942. “Appropriation Figures for the Antitrust Division,”
www.justice.gov/atr//files/16/44/26/f164426/public/10804a.htm
, accessed March 24, 2010.

31
. Harry Truman, “Annual Message to the Congress on the State of the Union,” January 6, 1947; Truman, “Annual Budget Message to the Congress, Fiscal Year 1948,” January 10, 1947; H. Graham Morison, interview by Jerry N. Hess, August 4 and 10, 1972, 293, Harry S. Truman Library and Museum,
www.trumanlibrary.org/oralhist/morison2.htm
and
morison3.htm
, accessed March 24, 2010.

20: MOM AND POP’S LAST STAND

1
. On the labor shortage, see Minutes, meeting of division managers and division meat merchandisers, Kroger Grocery and Baking Company, June 26–27, 1941, in RG 60, General Records of the Department of Justice, Antitrust Division, Enclosures to Classified Subject Files, 1930–87, Class 60 enclosures, box 75, NARA-CP. On relative chain-store performance, see Reba L. Osborne, “Retail Sales of Chain and Mail-Order Firms,”
Survey of Current Business
, February 1944, 12–20; Genevieve B. Wimsatt, “Business Discontinuances, 1940–42,”
Survey of Current Business
, November 1943, 18. Byoir comment is in Gx 234.

2
. Jacobs, “‘How About Some Meat?’” 916.

3
. Galbraith to Henderson, memo, December 8, 1942, Leon Henderson Papers, box 29, FDR.

4
. Pettengill, “Comparative Retail Grocery Ceiling Prices in Los Angeles,” 149; Galbraith to Henderson, memo, October 6, 1942, and “Retail Price Plan,” December 5, 1942, Leon Henderson Papers, box 29, FDR.

5
. “Won’t Go Hungry, Says A&P Head,”
NYT
, January 3, 1943; Clement Winston and Reba L. Osborne, “The Pattern of Chain Store Sales in Retail Distribution,”
Survey of Current Business
, July 1947, 12.

6
. Peter M. Tamburo (chief regional investigator, Office of Price Administration [OPA], Dallas) to Edward Crane (regional attorney, OPA), memo, July 27, 1942; Geoffrey Baker (associate price executive, food and food products branch, OPA) to M. B. Schilling (A&P), August 26, 1942; Byron Jay (A&P) to Henry Curran (OPA), June 1, 1943; R. B. Sharbrough (department of research and statistics, A&P) to W. A. Neilander (OPA), December 15, 1941; Sharbrough to Galbraith, April 4, 1942; W. A. Donahoe (sales manager, A&P, Scranton, Pa.) to Wm. P. Farrell (acting price executive, OPA, Scranton), September 13, 1943; T. A. Connors (A&P, Chicago) to Victor Lea (fats and oil division, OPA), telegram, April 1, 1942; all in RG 188, Office of Price Administration, Price Records, National Office, Food Price Division Central Files, Non-governmental Correspondence, 1941–43, box 3132, NARA-CP. Newspaper articles attributed supermarkets’ poor financial performance during the war to lack of inventory, but this does not appear to be accurate in the case of A&P, whose inventory-to-sales ratios in February 1943 and February 1944 were higher than before the war.

7
. Patzig, “Effect of the War on Retail Food Outlets,” 111.

8
. “A&P Sales Rise to $1,471,177,992,”
NYT
, July 27, 1943; “Food Chains Lose Under War Curbs,”
NYT
, August 15, 1945; Clement Winston and Reba L. Osborne, “Postwar Patterns of Chain and Independent Store Sales,”
Survey of Current Business
, January 1949, 10; Office of Price Administration, Office of Temporary Controls, “Survey of Chain Grocery Stores and Wholesale Grocers: Summary of Operating Data for Various Periods, 1936 Through 1945,” May 1947.

9
.
AG
, February 13, 1946, 44, 54–57; Winston and Osborne, “Pattern of Chain Store Sales,” 13; Merrill Lynch, Pierce, Fenner & Beane,
Chain Stores: Investigate Then Invest
(New York, 1948), 15.