The ways in which the American public bought groceries was completely transformed during this period, thanks to the creation of large, self-serve markets. No longer did housewives have to request each item they wished to purchase from an imperious clerk who manipulated a long stick with retractable tongs to pull down items placed on the impossibly high shelves. In the twentieth century, American women and men were granted the freedom to inspect and choose whatever food product they desired. For example, between 1912 and 1915, a new A&P (the Great Atlantic and Pacific Tea Company) market opened every three days. The stores were clean, airy, and large, but free of expensive fixtures. Their floor plan was divided into sections specializing in meat, produce, dairy products, and other staples. With the money saved by their no-frills and high-sales-volume approach, A&P passed on its savings to the consumer.39 In 1916, an entrepreneur named Clarence Saunders advanced the field even further by opening the first Piggly Wiggly grocery store in Memphis, Tennessee. His store featured a floor plan that led customers through turnstiles and into a maze of bountiful shelves, allowing them to see the entire cache of beautifully packaged merchandise before being funneled out through the store’s cashier lines and only exit. Grocery stores were never the same since and, thus, began their inexorable march toward the modern mega-supermarket, where most of us purchase our groceries, from the fresh to the frozen.
And, of course, all of these advances and changes in how Americans perceived, purchased, prepared, and consumed food during the opening decades of the twentieth century proved to be extremely beneficial for Will’s company.
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WILL’S GREAT SUCCESS is even more miraculous when considering the many obstacles John threw in his path.40 In 1905, the Kellogg brothers’ annual gross income from their flaked cereals was a little more than $100,000 (about $2.78 million in 2016). During the same period, C. W. Post bombarded newspapers and magazines with his advertisements, operated three factories working around the clock making Postum cereal coffee and Grape-Nuts, and was generating many millions of dollars a year. Even if Will could drum up additional orders by means of advertising and promotion, which his brother would never allow, his poorly capitalized, makeshift factory could not manufacture much more.
It was not just the vast sums of money Will felt John was leaving for others to collect from the manufacture of “their” cereal foods. Above all, Will firmly believed in the quality, utility, taste, and ultimate success of his Corn Flakes. Just as Mickey Mouse, as social historian Neal Gabler observed, “served as an expression of Walt [Disney]’s personal mythology of trial and triumph,” a box of Corn Flakes long served as Will Kellogg’s powerful emblem of tribulation, tenacity, and accomplishment.41 Nearly a half century later, Will recalled a rare moment of moxie in 1898 when he told several Adventist Elders and board members “[that] if given the opportunity, the food company would develop in such a manner that the Sanitarium would be only a sideshow as to the magnitude of the food business. I confess at the time I little realized the extent to which the food business might develop in Battle Creek.”42
Paltry sales figures aside, in late June of 1905 Will seized his destiny by offering to buy the cereal business outright. His timing could not have been better. The doctor was deep in debt with notes on the Sanitarium for over $180,000 (about $5 million in 2016) and $35,000 (or $971,000 in 2016) in personal debt.43 Money problems hardly fazed the doctor and he demanded Will hand over a great many shares of stock of his cereal company along with a considerable amount of cash in exchange for his blessing. Legally speaking, Will no longer needed John’s permission. The prevailing interpretations of U.S. patent law at the time clearly held that as long as he slightly changed the flaking process, he would not be infringing on the doctor’s patents.
Regardless of his legal rights, Will wanted a green light brighter than Jay Gatsby’s as both evidence of his business integrity and to avoid predictable problems down the path given John’s habit of contesting virtually every legal agreement he signed. As Will explained years later, “the patent on flaked cereal foods had been declared invalid and all I needed to do, if I wanted, was to start making corn flakes myself. But I wanted to play the game fair and square.”44 On January 22, 1906, after six months of protracted negotiations, John finally sold Will the rights to manufacturing and selling Corn Flakes.45 The price was $170,000 (about $4.62 million in 2016), broken down into $22,440 in cash (about $450,000 in 2016) and $147,560 (more than $3 million in 2016) in company stock. Even with this rather generous deal the doctor inserted a contentious clause that would soon disrupt Will’s path. On one contract, the doctor transferred to Will’s company the rights to sell Corn Flakes worldwide. A few weeks later, the doctor insisted on agreeing to transfer only the rights to sell Corn Flakes in the United States, while retaining the rights outside the United States and anywhere in the world. Will, weary of wrangling with John, grudgingly gave in and approved the terms of the second contract.46 Granting his brother the foreign rights to Corn Flakes represents one of the rare examples of shortsightedness during Will’s long business career. To be sure, the U.S. market was where Will was focusing his business during these years and he needed to safeguard his exclusivity of those rights. He may have been more intent on securing an agreement from John that forbade him from divulging the recipe for Corn Flakes; or he may have been blindsided by a desire to get the doctor out of his rapidly thinning hair.
Founding his company placed Will in an almost insurmountable financial hole. He desperately needed large sums of money to increase production and pay off his brother. He interested one backer, a former Sanitarium patient named Charles D. Bolin, to pledge $35,000 (about $950,000 in 2016) but Will still needed, at least, another $15,000 (about $407,000 in 2016), to get the firm on its feet. Perhaps too optimistically, he hoped his elder brother would be willing to invest in his future after all his years of hard work and service for the cause of biologic living. This was not to be. After a factory site was finally decided upon, John asked his younger brother to come over to his house to discuss the future of the business. During what started as an ostensibly peaceful meeting, John disabused Will of the suggestion that he would co-sign any bank loans or contribute a dime to the new venture. Will stormed off his brother’s property, cursing John the entire way home. Eventually his anger turned into panic when he realized he was entirely obligated to repay the enormous debt. The steady Puss consoled her husband and told Will he needed to go find the money elsewhere.
The next day, Will approached many of his relatives to help him set up the new factory and pay his employees and creditors. He hated begging for money but there were many other Kelloggs in Battle Creek who had great faith in Will’s integrity and work ethic. Will told one half-niece “If I don’t pay this and my other debts within three months, I will lose everything I have in the world.”47 One way Will retaliated against his brother, incidentally, was by reminding John that he still owned 25 percent of Dr. Kellogg’s Sanitas Nut Food Company and, thus, the doctor owed him a quarter of the sale price ($42,500 in stock) and another $30,000 in stock for Will’s share in the old Sanitas factory building.
Before long, the doctor was nosing into Will’s business and engaging in cruel acts of humiliation and domination. Shortly after the Battle Creek Toasted Corn Flake Company was incorporated on February 19, 1906, Dr. Kellogg complained about Will’s $250 weekly salary (roughly $6,790 in 2016). Turning the table on the issue of their 75:25 profit-sharing plan for the Sanitas Company, John demanded he receive Will’s paychecks each week in order to “claw back” 75 percent of it, followed by the doctor sending his younger brother a check for $62.50, his 25 percent share (about $1,750 in 2016).48
This arrangement, which lasted nearly a year, hardly lessened Will’s antipathy for John. Every Friday, when he cashed his discounted paycheck, Will complained to Puss how important it was that he buy out his brother’s share of the fledgling firm.49 At this early stage of the business, however, Will just did not have the cap
ital to both buy John out and grow his business. He had to bide his time and carefully plan his attack. For those who knew the quiet Will well, there was little question that he would succeed. As Dr. William Sadler observed in 1960, John Harvey Kellogg and Will Keith Kellogg were “tricky in certain areas [and, if you weren’t careful, they] would take advantage of you.”50
W. K. Kellogg’s first Corn Flakes factory, 1906. It burned to the ground on July 4, 1907. Credit 87
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IN EARLY MARCH OF 1906, Will purchased a ramshackle factory on Battle Creek’s Bartlett Street, which was formerly owned by the Hygienic Food Company, makers of Mapl-Flakes. The price was $26,340.50 (about $716,000 in 2016) and it included enough production equipment and office space to start making cereal immediately. The factory was near the Grand Trunk Railway Line, which allowed for easy shipping and receiving. Part of the purchase price included a huge, three-story device called a “travelling oven.”51 Like a Ferris wheel, it consisted of a series of moving hoppers, or shelves, which were filled with the raw dough flakes. Exposed to just the right amount of heat from the ovens, the flakes dried and baked perfectly as each hopper moved up and down, closer and away from the heat source. Will’s first staff consisted of seven men and women he recruited from his brother’s food company. To protect against the thieves trying to make money by making and selling substandard versions of his products, Will ordered a guard to stand watch at the factory’s front door, letting in only those who worked for the company. In subsequent years, the outside mechanics he contracted to build and maintain the factory’s complex equipment were admitted only after displaying specially endorsed and dated entry passes. All Kellogg’s employees had to sign a pledge of nondisclosure against divulging any of the recipes and manufacturing processes.
At the end of his first year of operation, Will’s Toasted Corn Flake Company shipped out 178,943 cases of cereal. This is even more impressive considering that during the company’s first two months, April and May of 1906, the factory produced only one hundred cases a day and during the last seven months of the fiscal year, more than 170,000 cases (nearly 25,000 per month) were manufactured and shipped.52
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JUST AS PRODUCTION was humming and the advertising campaigns were corralling new grocers and customers, a tragedy struck that had the potential to put Will out of business. Eerily, on the evening of July 4, 1907, the original wooden corn flake factory burned to the ground.53 Will recalled the fires that destroyed both the old Sanitarium and the Review and Herald building and worried that a “fire bug was at work” once more in Battle Creek.54 The conspiracy theory was that a rogue Adventist torched the place in obeisance to Ellen White’s allegation that the Kelloggs were agents of Satan. Far more likely a cause was connected to a group of night shift workers seen setting off fireworks, in celebration of the nation’s birthday, right near the building.55
On July 4, 1907, Will had neither the time nor the luxury to identify a culprit. The new factory owner raced the several blocks from his home on Van Buren Street and arrived at the plant sweating and severely winded but conscious enough to watch his net worth and future security burn to the ground. Will remained calm and climbed up on a wooden box to address the distressed employees who came to the factory hoping to quench the fire. “I want all you men to report here tomorrow morning,” Will announced. “You will not be laid off. Some of you will be assigned to our Norka plant and the rest can be used in clean up and construction work.” The Norka plant was a nearby four-story former oatmeal factory Will had purchased in late 1906 both for extra capacity to make Corn Flakes and, for a short period, to manufacture an unappealing oat and sugar concoction that was discontinued because it tended to go rancid in the box. The Norka’s factory served as its temporary home during the time the new factory was being built.56
Twelve hours after the fire, Will met with a Chicago-based architect named M. J. Morehouse to design his new plant. Later that night a determined Will wrote Arch Shaw, “The fire is of no consequence. You can’t burn down what we have registered in the minds of the American woman.”57 Three weeks later, he selected a new location on Porter and Stile Streets on the east side of town, equidistant from both the Grand Trunk and Michigan Central lines. A quirk in the Michigan Central’s fee schedules brought a smile to Will’s face. The railway company categorized boxes of cereal as milled grain, rather than finished manufactured goods, and shipped them at a lower shipping rate. Soon after, the Grand Trunk followed suit to avoid losing business. This break proved to be a boon to Will as well as the Post and Quaker Oats companies, which also had major factories nearby.58
The July 4th fire destroyed not only the building but also his custom-made rolling mills. Will had long worked with the Lauhoff Brothers of Detroit, who only a few years earlier developed the water-cooled rollers that flattened corn grit dough and produced perfect flakes. By early 1906, however, the Lauhoffs had signed an exclusive contract with C. W. Post because the “Great Imitator” had designs for his own version of corn flakes. True to form, the wily Post insisted on a clause in his contract that strictly limited access to the special rolling devices for his company but not to any other cereal manufacturer.
Gerald Carson, a social historian of cereal foods in America, claimed that Post called for this stipulation partly as a result of his simmering rage at Will for not lending him the coal a year earlier that Post needed to power his plant.59 Will’s authorized biographer Horace Powell describes Charley Post as the classic robber baron of the day. Post had the resources to buy as many of the intricate rollers as the Lauhoffs produced and so he did. He either put them to use in his factory or simply stored them away for future use, “no doubt laughing heartily at the predicament of the young upstart company. But he hadn’t reckoned with the determination and persuasiveness of Will Kellogg.”60
Will really needed those rollers. They were crucial to his operation. In one account, he traveled to Detroit with “tears in his eyes.” Upon arriving at the Lauhoff Brothers factory, he begged the proprietor, “Frank, my plant has burned down. I’m falling behind on my orders. What can you do for me?”61 Such an open display of emotion on Will’s part seems highly unlikely. A more plausible version tells of Will returning to Battle Creek after his disappointing visit to Detroit. Walking through the ashes of what was once his factory, Will stubbed his toe on a long round metal object. Brushing away the ash, he recognized he had tripped on what was once a water-cooled roller, the very device he had asked the Lauhoff Brothers to design several years earlier and that he now could no longer purchase.
Running to the nearest telephone, Will demanded that the operator drop everything and place a long-distance call to Detroit. The question Will purportedly asked Frank Lauhoff sounds like a perfect example of the legal end-runs Will often played on his competitors: “Does that contract of yours say anything against repairing broken machines?” he asked. “You could get around the contract that way, couldn’t you?” Before Mr. Lauhoff had a chance to display the slightest hesitation, Will reminded the roller man, “We helped you get started in the cereal roller business. Now you’ve got to help us.”62
The ploy worked. Will etched his name with acid on each damaged roller he rescued from the rubble. He then ordered an underling to travel in the freight car carrying them between Battle Creek and Detroit to make sure Post would not appropriate them, as was potentially his contractual right, once they were repaired. Adding to the subterfuge, the Lauhoffs packed the repaired rollers and “flaking mills” in boxes labeled “The Crystal Malt Flakes Company,” the name of the Lauhoffs’ now defunct cereal company. Even sneakier, the Crystal Malt boxes were not officially listed on the train’s bill of lading and the Lauhoffs placed them in the darkest corners of the boxcars transporting the goods. Before each delivery, Will received an advance call from Frank Lauhoff, who would cryptically state, “I am sending you another car load of Crystal Malt Flakes. Unload it at night and you will find a diamond in the corner.” Charles Post
and his executives did not hear about the scheme until long after. Decades later Frank Lauhoff recalled, “Even after all those years, they gave me hell about it.”63
Drawing a loan of $55,000 (over $1 million in 2016) against the factory’s insurance policy, which was worth $65,000 (more than $1.2 million in 2016), Will threw himself into the construction of his new, brick, fireproof factory. In early September, only a few weeks after he broke ground for the new facility, he realized he would need $50,000 more to complete the structure. Always profiting from his past business experiences, Will applied the know-how he acquired in raising the bonds and loans for the rebuilding of his brother’s Sanitarium in 1902. Although the Detroit bankers refused to invest in still another cereal company situated in Battle Creek, Will did find a small Chicago bank, the National Bank of the Republic, willing to loan him $30,000 (roughly $567,000 in 2016) on three ninety-day notes. Will later asked the banker what inspired so much confidence in his firm. The banker replied that he was impressed by Will’s character and his attention to detail in both his bookkeeping records and on his loan application. “We have to take chances same as other people,” the banker told Will. “Your statement is good.” In turn, W. K. Kellogg remained a loyal, and profitable, customer long after far larger and richer financial institutions competed to secure his business. Incidentally, the banker was entirely correct in his assessment of Will’s business plan. He paid back the first $20,000 within ninety days and never took out the third installment of $10,000.64
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