The Great A&P and the Struggle for Small Business in America (43 page)

Look further, and there are striking parallels between the objections to A&P in the first half of the twentieth century and those raised against Walmart in the twenty-first. Walmart was widely accused of destroying the trade of small-town merchants; similar charges were raised against A&P from 1869 into the 1950s. Walmart’s relentless squeeze on suppliers mirrors that attributed to A&P as early as 1915; it was A&P, not Walmart, that pioneered the practice of carefully dissecting manufacturers’ costs to determine what prices they should receive for their products. Walmart’s paternalistic management methods and vociferous resistance to labor unions had their parallels in A&P’s aversion to unions before 1938, when it changed its tune in return for union support in defeating anti-chain legislation. Even the claims that Walmart’s insistence on shaving costs led inexorably to the sale of dangerous and unsafe products echoed complaints raised eight decades earlier that A&P kept prices down by selling short weights of chicken and inferior grades of canned goods. Walmart’s competitors, like A&P’s many years before, sought to slow the retail giant’s growth by tapping into public anxieties arising from the disruption of familiar ways, the loss of local uniqueness, the vulnerability to distant economic forces. Even Walmart’s astute use of public relations and advertising to overcome opposition to new stores and to counter criticism of its business practices followed in the footsteps of Carl Byoir’s efforts on behalf of A&P, starting in 1937.
11

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Together, George L. and John A. Hartford worked at the Great Atlantic & Pacific Tea Company for 144 years. When George L. came to work with his father in 1880, tins of fish were still welded shut one at a time by skilled can makers, baking powders consisted largely of ineffective starches, and soaps and breakfast foods were produced by thousands of tiny firms unknown beyond their hometowns. By the time of his death, in 1957, big businesses dominated everything. A handful of beef and pork processors controlled the meat trade nationwide. Makers of branded foods had consolidated, as had manufacturers of toiletries and housekeeping products, in order to shave warehousing and delivery costs and command better advertising deals from national television networks. The seven biggest retail grocery chains sold one-fourth of all the food in the entire country. Mr. George and Mr. John did as much as anyone to turn the personal routines of local commerce into an impersonal series of anonymous transactions, in which shoppers rarely think of the people who supply their daily needs.

For seven decades, the collective and complementary strengths of George L. and John A. Hartford allowed their company to respond deftly to rapid changes in economic conditions, competitive circumstances, and consumer tastes. But as much as they deserve full credit for A&P’s stunning rise and its prolonged ascendancy, they also bear responsibility for its rapid collapse. The values they prized in their managers—experience, loyalty, and adherence to company rules—made for an organization that was highly competent, but not highly adaptable. Again and again, John A. Hartford intervened personally to persuade his reluctant executives to try new ideas. The Economy Store, the installation of meat counters, and the shift to supermarkets all faced foot-dragging by managers who were happy doing things the old way. Yet for all that resistance, John and his brother stood by their men. They recruited new blood into the executive ranks only once, when the belated realization that A&P faced a potentially lethal threat from the anti-chain movement led them to hire John’s personal lawyer as chief counsel and to engage Carl Byoir for public relations advice. The company never headhunted executive talent from its competitors, from other retailers, or from other industries. If they thought A&P had anything to learn from outsiders, the brothers were extremely reluctant to say so.

Such inwardness was not toxic so long as John A. Hartford was on hand to steer the ship. He remained vigorous until the day of his death at seventy-nine, constantly challenging his managers to keep up with the demands of a fast-changing country. But with John’s death in 1951, the dynamism went out of A&P. He and his brother had failed to cultivate a successor generation of executives who had the broad experience, imagination, and acute cultural antennae to go along with their financial acumen. They left behind a corporate structure under which the new chief executive reported to a board of directors that never challenged his decisions because its members all reported to him. A company that desperately needed new blood and new thinking was put in the charge of leaders more concerned with conserving the past than with shaping the future. From that point on, A&P’s downfall was assured. What the anti-chain broadcasters, New Deal code authorities, populist politicians, and ardent trustbusters failed to accomplish in decades of trying, creative destruction took care of quickly.

NOTES

ABBREVIATIONS

AG: American Grocer

CHS: Chicago Historical Society

Danville Trial Documents:

Dx: Defense exhibit

Gx: Government exhibit

Tr: Transcript

FDR: Franklin Delano Roosevelt Presidential Library, Hyde Park, N.Y.

OF: Office Files

PPF: President’s Personal Files

FTC: U.S. Federal Trade Commission

HFF: Hartford Family Foundation Archive

JHSGW: Jewish Historical Society of Greater Washington, Washington, D.C.

JOC: Journal of Commerce

JPMC: J. P. Morgan Chase Archives, New York

KSHS: Kansas State Historical Society, Topeka

LSUS: Louisiana State University at Shreveport Archive

NARA-C: National Archives and Records Administration, Great Lakes Region, Chicago

NARA-CP: National Archives and Records Administration, College Park, Md.

NARA-LA: National Archives and Records Administration, Legislative Archives, Washington, D.C.

NARA-NY: National Archives and Records Administration, Northeast Region, New York

N-YHS: New-York Historical Society

NYMA: New York Municipal Archives

NYPL: New York Public Library

NYT: New York Times

SRP: Sam Rayburn Papers, Dolph Briscoe Center, University of Texas, Austin

TSL: Texas State Library and Archives, Austin

WPP: Wright Patman Papers, Lyndon B. Johnson Presidential Library, Austin, Tex.

WSJ
:
Wall Street Journal

1: THE VERDICT

1
. “Walter Lindley, U.S. Judge, 77, Dies,”
NYT
, January 4, 1958; “Cannon Leaves $500,000 Estate to 2 Daughters,”
Chicago Tribune
, January 16, 1927; “16 Candy Jobbers Are Found Guilty,”
NYT
, April 12, 1929; “Landis Is Upheld in Fight on Rule,”
NYT
, April 22, 1931; “Impeachment Action Against 2 Judges Fails,”
Chicago Tribune
, May 30, 1934; “Proposed for High Court,”
NYT
, March 21, 1930; “Judge in G.M. Case Chides High Court,”
NYT
, October 26, 1939.

2
. “3 Concerns, 3 Persons Assessed as Some Others Are Cleared,”
NYT
, December 13, 1940; “Judge in G.M. Case Chides High Court.” The case was formally styled
United States v. New York Great Atlantic & Pacific Tea Co.
, 67 F. Supp. 626 (E.D. Ill., September 21, 1946). It is referred to hereafter in these notes as “Danville trial.”

3
. “Crowd Fills Court to See John Hartford,”
Chicago Tribune
, October 24, 1945.

4
. Rentz, “Death of ‘Grandma,’” MS, 2; John Updike, “A&P,” in
Pigeon Feathers and Other Stories
(New York, 1962), 187–96; Davis,
Don’t Make A&P Mad
.

5
. Opinion, Danville trial, 67 F. Supp. 676, 636.

6
. J. C. Furnas, “Mr. George & Mr. John,”
Saturday Evening Post
, December 31, 1938; “Red Circle and Gold Leaf,”
Time
, November 13, 1950.

7
. See, for example, Merle Crowell, “You Don’t Have to Be Brilliant,”
American Magazine
, February 1931, 20.

8
. U.S. Department of Commerce,
Census of Distribution: Kansas City, Missouri
, mimeo, October 25, 1927. The 1930 Census of Retail Distribution counted 481,891 food stores and another 104,089 general stores that sold groceries in 1929, for a total of 585,980 stores whose main business was selling food. On wholesalers, see U.S. Bureau of the Census,
Fifteenth Census: Census of Distribution. Wholesale Distribution (Trade Series): Groceries and Food Specialties
(Washington, D.C., 1933), 16, 38, 42–44. That census shows 47,132 establishments “producing goods sold through grocery trade channels,” but the tabulation does not include the 2,443 meat and poultry plants and numerous plants making such items as candles, patent medicines, toiletries, and tobacco products shown in U.S. Bureau of the Census,
Statistical Abstract, 1933
(Washington, D.C.: 1933), 697–716. The United States had 29.9 million families in 1930;
Statistical Abstract, 1933
, 48.

9
. Total employment in food retailing in 1929, including employees and proprietors in food stores and general stores selling food, was 1.2 million. Employment in food wholesaling was 187,766 and in manufacturing 753,247, yielding a total of more than 2.1 million workers out of a nonfarm workforce of 38 million. Industry employment from
1930 Retail Census
, 45, and the 1930
Census of Distribution
.

10
. Food accounted for $17.9 billion of the $71.8 billion of consumer spending in 1925, or 25 percent. Based on patterns a few years later, for which more detailed information is available, approximately 80 percent of all food spending was for at-home consumption, with purchased meals and alcoholic beverages accounting for the rest. The food component alone thus accounted for roughly twenty cents of every dollar of consumer spending. U.S. Bureau of the Census,
Historical Statistics of the United States,
319, ser. 419–22; 320, ser. 470–71; 323, ser. 844–45; and 326, ser. 773–74. With the 1967 level set equal to 100, food consumption per capita in 1925 was 86; not until 1940 did the index reach 90. Although diets had plenty of calories, they were short on nutrients such as calcium and thiamine. See
Historical Statistics of the United States
, 328, ser. 849–65.

11
. Schumpeter,
Capitalism, Socialism, and Democracy
, 83.

12
. Karl Marx and Friedrich Engels,
Das Kapital
, vol. 3 (Hamburg, 1894), 303; William Graham Sumner, “The Forgotten Man” (1883), in
The Forgotten Man, and Other Essays
, ed. Albert Galloway Keller (Manchester, N.H., 1969), 491.

13
. Ian Melville,
Marketing in Japan
(Oxford, 1999), 195;
Journal Officiel de la République Française
, December 30, 1973, 14142.

14
. “Retailers Protest Controversial Law,”
Prague Post
, December 16, 2009.

2: THE FOUNDER

1
. Great Atlantic & Pacific Tea Co.,
Three Score Years and Ten
, 5. This official company version of history was accepted in the most widely cited work on U.S. chain retailing, Godfrey Lebhar’s
Chain Stores in America
, 21, and propagated in such prominent places as a front-page article in
The Wall Street Journal
, “A&P’s Saga Includes a Pagoda, Price Wars, and Buying Brigades,”
WSJ
, December 19, 1958, and
Barron’s
, February 20, 1922, 10. The official story was reiterated in the announcements that accompanied the opening of new stores, prompting further embellishment. For example, the
Hartford Courant
, October 25, 1924, reported that the store George H. Hartford opened on Vesey Street in 1859 was “the first grocery store to operate on a strictly cash basis. The front of the store was painted a brilliant red and this was the origin of the red-front chain-store idea.” In fact, both the sale of groceries and the red color scheme developed many years after 1859, and many other firms sold groceries on a cash-only basis much earlier. Peter Coclanis wrote in
The Encyclopedia of New York History
, ed. Kenneth T. Jackson (New Haven, Conn., 1995), that Great Atlantic & Pacific “was formed as a partnership in 1859. It initially had one tea shop on Vesey Street.” No available evidence supports the date, the address, or the existence of a partnership. The company contributed to the confusion surrounding its origins by changing its foundation myth several times. An 1867 advertisement stated that the Great American Tea Company, indisputably the predecessor of Great Atlantic & Pacific Tea Company, was “established 1861”;
Commercial Enterprise
, Great American Tea Company, HFF. When Great Atlantic & Pacific issued bonds for the first time in 1916, it told investors, “The present business was started in 1858”;
WSJ
, June 15, 1916. In advertising a dozen years later, it described the Great American Tea Company, progenitor of A&P, as “Roasters of Good Coffee Since 1856.” See “The Great American News,” folder 431, HFF. The story of George H. Hartford buying an entire cargo of tea in 1859 was presented in court in 1945 by an attorney for the company; Tr 84.

2
. As one example of the legends and misstatements of fact that developed over time, a website of the Harvard Business School library offered the following history: “The Great Atlantic & Pacific Tea Company arose from the partnership created in 1859 between George Huntington Hartford and George Francis Gilman. Using Gilman’s connections as a grocer and son of a wealthy ship owner, Hartford purchased coffee and tea from clipper ships on the docks of New York City. By eliminating middlemen, the partners were able to sell their wares at ‘cargo prices.’ This venture was so successful that in 1869 Hartford and Gilman opened a series of stores under the name Great American Tea Company”;
www.library.hbs.edu/hc/lehman/chrono.html?company=the_great_atlantic_pacific_tea_company_inc
, accessed May 10, 2009. There is no evidence that Gilman was ever a grocer or that he and Hartford were partners in 1859. The earliest known use of the Great American Tea Company name was in 1863.