The Great A&P and the Struggle for Small Business in America

by Marc Levinson

  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.

  4. Jerry Litvin, interview by Jessica Kaz, box 2, JHSGW; Claude Jinkerson, Maurice Hartshorn, et al., “Grocery Clerks’ Local 648 in San Francisco,” interview by David F. Selvin and Corinne L. Gilb, November 18, 1957, Institute of Industrial Relations Oral History Project, University of California at Berkeley.

  5. 1930 Retail Census, 53, 45.

  6. Deutsch, Building a Housewife’s Paradise, 34; Bureau of Business Research, Harvard University Graduate School of Business Administration, Operating Expenses in Retail Grocery Stores in 1923, 30.

  7. Operating Expenses in Retail Grocery Stores in 1923, 11, reports that 61 percent of sales at stores surveyed were made on credit. 1930 Retail Census, 70; Pearl Cohen interview, box 2, JHSGW; Finlay, Paul Finlay’s Book for Grocers, 91.

  8. On product selection, see Finlay, Paul Finlay’s Book for Grocers, 92. Sugar accounted for 7.4 percent of grocery-store sales in 1929; 1930 Retail Census, 159. In 1917–19, the average after-tax income of urban wage-earning families was $1,505, of which an average of $549 was spent on food. With the 1967 level set equal to 100, food consumption per capita in 1920 was 82.6; not until 1940 did the index reach 90. U.S. Bureau of the Census, Historical Statistics of the United States, 321, 328.

  9. Harold Katzman, “Pop’s Grocery Store,” Record, August 1989, 31, JHSGW. Rockmoor Grocery was the first store in what later became the Winn-Dixie chain. The anecdote about hamburger appears in the privately published recollections of one of that company’s founders, J. E. Davis, Don’t Make A&P Mad, 45.

  10. Memoir of Edward L. Snyder, box 2, JHSGW.

  11. Cohen, Making a New Deal, 110. In the early twentieth century, so few African-American grocers were able to achieve even modest prosperity that successful grocers became symbols of racial achievement; see the numerous profiles of grocers in Richings, Evidences of Progress Among Colored People.

  12. A 1920 study found that while Chicago families would buy clothing and other dry goods downtown, they bought 95 percent of their meat and 81 percent of their groceries in their immediate neighborhoods. See Shideler, “Chain Store,” chap. 3, 14. Expenditures per store calculated from 1930 Retail Census, 49.

  13. The annual pay for the average full-time employee in food retailing was $1,243 in 1929; 1930 Retail Census, 45. Reports of sales and profitability in food retailing based on voluntary surveys were extremely problematic because samples were biased toward stores whose managers were more competent and successful and therefore more likely to respond to surveys. The earliest known survey, in 1918, found the “average” profit among 1,076 grocers to be 2.3 percent of sales, but the word “average” appears to be used in the sense of “modal”; see Bureau of Business Research, Harvard University Graduate School of Business Administration, Management Problems in Retail Grocery Stores, 9. A corresponding 1919 study of only 263 stores reported average net profit of 2 percent, with a range from an improbably high 19.8 percent to a loss of 10.3 percent of sales; Bureau of Business Research, Harvard University Graduate School of Business Administration, Operating Expenses in Retail Grocery Stores in 1919, 10. The 1923 study of 471 non-chain grocers found the modal profit to be $1,170 on annual sales of $65,000, or 1.8 percent; Operating Expenses in Retail Grocery Stores in 1923, 8. The 1924 study found modal sales of $73,000 and net profit equaling 1.8 percent of sales, but reported profitability was only 1 percent for stores with less than $30,000 of annual sales and 1.4 percent for stores with sales of $30,000–$50,000; Bureau of Business Research, Harvard University Graduate School of Business Administration, Operating Expenses in Retail Grocery Stores in 1924, 55. All of these studies, by their authors’ own admission, are based on nonrepresentative samples; the typical store covered in the 1924 study, for example, had six employees, including partners and proprietors, at a time when the average grocery store had a single paid employee other than the owners.

  14. Furst, “Relationships Between th
e Numbers of Chain and Individually Owned Grocery Stores in Fort Wayne,” 340; Boer, “Mortality Costs,” 54; McGarry, Mortality in Retail Trade, and McGarry, “Mortality of Independent Grocery Stores in Buffalo and Pittsburgh”; Vivien Marie Palmer, “History of the Communities,” vol. 1, “Documentary History of the Rogers Park Community, Chicago” (Chicago, 1925), doc. 31.

  15. U.S. Bureau of the Census, Fifteenth Census: Census of Distribution. Wholesale Distribution (Trade Series). Groceries and Food Specialties, 16, 38, 45; Still, “Mortality of Seattle Grocery Wholesalers,” 162.

  16. Corbin’s Weekly Salesman, February 23, 1923, CHS; Finlay, Paul Finlay’s Book for Grocers, 14–19.

  17. U.S. Department of Commerce, Census of Distribution: Chicago, Illinois, mimeo, December 2, 1927.

  18. U.S. Congress, Joint Commission on Agricultural Inquiry, Marketing and Distribution, 108; Nourse, Chicago Produce Market, 102; Wilson, Cart That Changed the World, 28.

  19. FTC, Wholesale Marketing of Food, 160.

  20. U.S. Bureau of the Census, Fourteenth Census of the United States, vol. 8, Manufactures, 1919: General Report and Analytical Tables, 17; Koch, Financing of Large Corporations, 113; Moses, “G. Harold Powell and the Corporate Consolidation of the Modern Citrus Enterprise.”

  21. Duddy and Revzan, “Transportation and Marketing Facilities for Fresh Fruits and Vegetables in Chicago,” 282–84; U.S. Congress, Joint Commission on Agricultural Inquiry, Marketing and Distribution, 105. South Water Street, later renamed West Wacker Drive, was one block from the Loop in downtown Chicago.

  22. According to R. L. Polk, a market-research firm, about 50,000 of the estimated 337,665 grocery stores and meat markets operating in 1923 were chain owned, although many of the chains were extremely small; Shideler, “Chain Store,” chap. 4, 18. Great Atlantic & Pacific reported inventory worth $23.8 million on February 28, 1920; WSJ, April 24, 1920. Sales for the full year were $235 million, meaning that inventories equaled 10 percent of annual sales. The national average of seven turns appears in U.S. Congress, Joint Commission on Agricultural Inquiry, Marketing and Distribution, 163; although its precision is open to question, this average was based on a sample that included large chains, so the average for the smallest grocers may well have been less.

  23. Estimated net profit for food retailers averaged 4.2 percent from 1913 to 1919 (excluding 1914 and 1915, for which data are unavailable), but fell to 2.5 percent in both 1920 and 1921. Wholesale grocers’ profits averaged 1.5 percent of sales from 1913 to 1919, excluding 1914 and 1915, but averaged -0.81 percent in 1920 and 1921. U.S. Congress, Joint Commission on Agricultural Inquiry, Marketing and Distribution, 158, 173. There were sporadic anti-chain efforts during the war, such as an organization of twenty-five hundred retail grocers and twenty-four jobbers formed in Philadelphia in 1917 to mount a publicity campaign against the newly formed American Stores Company; see Shideler, “Chain Store,” chap. 6, 16. On A&P’s expenses, see “Charts, Presidents’ Meeting, October 28th and 29th, 1925,” box 57, Gx. On the National Association of Retail Grocers’ debate, see Tedlow, New and Improved, 218. On the Missouri group, see Shideler, “Chain Store,” chap. 6, 17.

  9: WRONG TURNS

  1. “Josephine Burnet Hartford,” Montclair Times, May 11, 1944; Montclair Horse Show Inc. Collection, box 1728, MPL; “A&P Goes to the Wars,” Fortune, April 1938, 96. Hartford relatives were prominent at the Montclair Horse Show; at least five family members took boxes at the 1937 show. “Horse Show Opened by Montclair Club,” NYT, October 2, 1937.

  2. Avis H. Anderson, A&P, 56–57; Ruth Reynolds, “Spotlight Hits Shrinking Hartfords,” New York Sunday News, January 9, 1938; “Wife Asks Alimony of $50,000 a Year from President Hartford of A. and P. Stores,” NYT, July 19, 1924.

  3. Pauline Hartford passport application, January 9, 1917; John Augustine Hartford passport application, September 18, 1924; “John A. Hartford and Former Wife Rewed,” NYT, May 5, 1925; Avis H. Anderson, A&P, 56, 58.

  4. “Died,” NYT, June 30, 1922. The information about the family’s belief that Edward refused to seek medical care for religious reasons was provided by Avis Anderson of the Hartford Family Foundation.

  5. Nourse, Chicago Produce Market, 95n.

  6. William G. Wrightson was the husband of Josephine Clews, daughter of George H. Hartford’s daughter Minnie. The ad was reprinted in A&P, “Guard Our Good Name,” n.d. [c. 1970]. On average, grocery wholesalers turned their stock of nonperishables 5.5 times per year in the 1913–21 period, implying inventory equal to 9.45 weeks of sales. Average retail stock turns for the 1913–21 period were 7.7, or 6.8 weeks of sales. On average, then, the period between wholesalers’ receipt of goods and retailers’ final sale was more than 16 weeks. In both cases, no figures are available for 1914 and 1915. U.S. Congress, Joint Commission on Agricultural Inquiry, Marketing and Distribution, 157, 163. This interpretation is consistent with the view of Alfred Chandler, The Visible Hand (Cambridge, Mass., 1977), 236, that for chain retailers, “economies of scale and distribution were not those of size but of speed. They did not come from building larger stores; they came from increasing stock-turn.” However, it is important to emphasize, as Chandler did not, that in food retailing, unlike general-merchandise retailing, distribution economies depend heavily on local scale because of the need for frequent replenishment of stores.

  7. John Hartford quotation is from “Red Circle and Gold Leaf,” Time, November 13, 1950. On scientific retailing, see Hess, “Selling Distribution and Its New Economics,” Annals of the American Academy of Political and Social Science 115 (1924). The entire issue of that prestigious publication was devoted to “scientific distribution.”

  8. “A&P Premium Booklet—1923, Lewiston, Pa., Store,” folder 150, HFF.

  9. On the meat packers, see “Losses of Packers in 1921,” Barron’s, February 3, 1922, 10. Tr 20429. In 1920, A&P owned eight manufacturing plants, including three coffee plants, two bakeries, a cheese warehouse, and two canneries. FTC, Chain Store Manufacturing, Senate doc. 13, 73rd Cong., 1st sess., April 5, 1933. In 1913, retailers and bakeries had earned roughly equal amounts of profit on every loaf of bread. By the end of World War I, bakeries were capturing a much larger slice, and retailers’ share had shrunk. The same trend held for products such as cornflakes and oatmeal. U.S. Congress, Joint Commission on Agricultural Inquiry, Marketing and Distribution, 209–16.

  10. Avis H. Anderson, A&P, 63–67.

  11. “A&P National Dairy Division, July 24, 1975,” binder 8B, HFF; bill of sale, HFF.

  12. “Wartime Building,” NYT, May 10, 1918; “Bread 2 Cents in Chicago,” NYT, February 6, 1923; “Great Atlantic & Pacific Tea Co.,” WSJ, October 25, 1923; “A&P Cuts Bread Prices,” WSJ, February 7, 1927; Rentz, “Death of Grandma,” MS, 51–52; FTC, Chain Store Manufacturing.

  13. U.S. Department of Commerce, Bureau of Fisheries, Report of the United States Commissioner of Fisheries, 1923, 64–65; 1924, 90; 1926, 282–86.

  14. Avis H. Anderson, A&P, 90–91.

  15. Ibid., 84–85; Great Atlantic & Pacific Tea Co., Three Score Years and Ten, 37; “A&P Cuts Bread Prices.”

  16. Avis H. Anderson, A&P, 32; “Employees to Share Chain Store Profit,” NYT, June 5, 1925; “Dividends Declared,” NYT, May 15, 1924; “Eight Companies Declare Dividends,” NYT, May 15, 1925.

  17. “Charts, Presidents’ Meeting, October 28th and 29th 1925,” box 67, Dx 212.

  18. Baxter, Chain Store Distribution and Management, 181; “Grocers Thrive in Philadelphia,” WSJ, September 12, 1925. Factory profits are in Adelman, A&P, 254. For physical volume and selling expenses, see Adelman, A&P, 434, 436. Adelman, A&P, 438, constructed estimates of the company’s equity investment, including retained surplus. His calculations show that return on equity in 1924 was 7.1 percent, the lowest of any year during the decade. Adelman, A&P, 445, estimates that cash flow was negative in 1923, 1924, and 1925.

  10: THE PROFIT MACHINE

  1. Herbert Hoover, “The Problem of Distribution,
” delivered before the National Distribution Conference, January 14, 1925.

  2. Woolworth’s sales came to $216 million in 1924, and those of Sears, Roebuck, the third-largest retailer, were $206 million. The companies’ fiscal years were not identical. John Hartford quotation is at Tr 20436. Adelman, A&P, 29, emphasizes the lack of strategic planning.

  3. John A. Hartford to Mr. Friele (title unknown), February 23, 1924, file 157, HFF.

  4. Hartford to John B. Edsall (manager), telegram, Newburgh, N.Y., February 11, 1924, file 157, “Correspondence from John A. Hartford,” HFF; Merle Crowell, “You Don’t Have to Be Brilliant,” American Magazine, February 1931, 21. Some of the reporting forms are in folder 150, HFF.

  5. U.S. Congress, Joint Commission on Agricultural Inquiry, Marketing and Distribution, 206. Operating expenses are given in Adelman, A&P, 436. A three-minute call from New York to Chicago could take hours to set up and cost $4.65; U.S. Bureau of the Census, Historical Statistics of the United States, 784, ser. R 14. Store clerks’ pay varied considerably by location. In San Francisco, where wages were probably well above the national average, clerks earned $30–$36 for a six-day, fifty-four-hour week, or $5–$6 per day; see David F. Selvin, Union Profile: The Fifty Years of Grocery Clerks Union, Local 648 (San Francisco, 1960), 18; Fortune, July 1930.

  6. Comments of S. M. Flickinger in Russell, Lyons, and Flickinger, “Social and Economic Aspects of Chain Stores,” 35; Crowell, “You Don’t Have to Be Brilliant,” 21; “National Tea Stock Listed,” NYT, April 13, 1924. In November 1925, 1,657 stores owned by three companies were combined into the publicly traded First National Stores, and the following year 784 stores controlled by the Skaggs family were assembled into Safeway Stores; “1,657 Stores in Merger,” NYT, November 26, 1925; “Safeway Stores Offered,” NYT, November 24, 1926. Kroger Grocery and Baking Company, the second-largest food chain, would have a public issue in 1927; “To Float Big Block of Kroger Shares,” NYT, December 7, 1927.