The Great A&P and the Struggle for Small Business in America (14 page)

Each jobber carried a limited line, so independent grocers needed to do business with several jobbers to obtain all the different products they wished to sell. Since they had neither the storage space nor the cash to buy in large quantities, they might see each jobber several times a week. Competitive pressure forced jobbers to render such expensive service. “It is not uncommon to see three or four large trucks of that many wholesale or jobbing firms standing before a single small retail store,” the Federal Trade Commission observed in 1919. “The cost of these individual delivery systems … is a large item to be figured into the wholesale prices.”
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The wholesalers and jobbers, in turn, procured much of their merchandise from some 60,000 manufacturing plants around the country: 25,095 bakeries, 3,738 butter plants, 723 factories making pickles and preserves, 348 soap works, and so on. Some food processors were extremely large. The meat packer Swift & Company booked $800 million of sales in 1921, more than any other company in America, and the National Biscuit Company sold cookies coast-to-coast. Most food manufacturers, however, were mom-and-pop enterprises: the average cannery had a mere twenty workers, the average cheese plant no employees save the proprietor. To find buyers for their goods, these small firms used a bewildering array of brokers, each of whom earned a commission on every sale to a wholesale buyer. Some fruits and vegetables were marketed through sizable cooperatives such as the California Fruit Growers Exchange, which could move large quantities to market quickly. Most produce, however, was sold by individual farmers to small-town dealers who in turn sold to bigger dealers in nearby cities, creating a lengthy and circuitous route before perishable merchandise finally reached the retail store.
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Motortrucks were used within cities, but the only practical way to move food long distances in the early 1920s was by train. Shipment of canned or packaged foods by big manufacturers was relatively efficient, because major wholesalers bought entire boxcar loads and had rail sidings alongside their warehouses. When a big-city wholesaler sent a smaller lot to a small-town wholesaler or retailer, however, the freight cost could be high. Moving fresh produce was a nightmare. In Chicago, jobbers or wholesalers used horse-drawn wagons to collect incoming loads at rail yards, because the unloading platforms were too narrow for motortrucks. The freight from eighty thousand carloads a year was then drayed through downtown to the wholesale market on South Water Street. The market buildings lacked refrigeration, forcing wholesalers to sell their fruits and vegetables quickly lest they spoil. In New York City, which had no central produce market, each railroad operated its own terminal. Apples packed in barrels arrived on the New York Central, while apples in boxes came on the Erie. “The result,” reported an astonished congressional committee, “is that the buyer desiring to purchase apples packed in the two types of packaging secures his supplies at two different docks some distance apart. If the same buyer desires certain other fruits or vegetables he must go to still other docks.”
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The rapid spread of chain food stores threatened the livelihood of everyone who worked in the food industry. Before World War I, chain grocery stores were limited mainly to the Northeast and Midwest, and the larger chains collectively owned only a couple thousand stores. The Hartfords’ aggressive expansion changed that picture. By 1923, Great Atlantic & Pacific alone had 9,236 outlets. Other companies, such as Kroger, Grand Union, and American Stores, could not open stores as quickly as A&P, so they raced to catch up by consolidating small chains into larger ones. The bigger chains had marked advantages over small chains and independent grocers. They could command volume discounts when buying from manufacturers. They could employ modern management techniques: Great Atlantic & Pacific turned its stock ten times in 1921, compared with seven times for the average grocery store, so it required much less working capital and storage space per dollar of sales. And the chains were willing to accept narrower margins than the independents: a chain could sacrifice a penny’s profit on each dollar of sales and hope to make up the difference with higher volume, but for a store owner selling $30,000 of groceries a year, a narrower margin might seriously squeeze the family budget.
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Independent grocers and their wholesale suppliers generally fared well before and during World War I. Food prices were persistently high, and profit margins were wide. But as peace brought sharply lower food prices in 1920 and 1921, retail grocers’ profits slumped badly, and grocery wholesalers booked losses. The downturn affected chains as well as independent stores; A&P’s expenses as a share of sales soared from 15 percent in 1919 to 18 percent in 1920. But the hard-pressed independent merchants knew where to lay the blame for their plight. In 1922, the National Association of Retail Grocers debated whether there should be a limit on the number of chain stores in any community. That same year, Missouri wholesalers and retailers organized the Association Opposed to Branch Stores and urged the state legislature to tax chain stores out of existence. These efforts fell short, but many more would follow.
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WRONG TURNS

Had they occupied the executive suite at a prominent company with millions of stockholders, or had they allowed themselves to be profiled in the press as captains of industry, the Hartfords’ personal lives could have brought embarrassment, and worse, to the Great Atlantic & Pacific Tea Company. Instead, when family affairs took an unorthodox turn, the company itself was entirely untouched by scandal. The Hartfords’ obsessive concern with privacy, in evidence from the company’s earliest days, paid off richly in the 1920s.

So far as is known, nothing untoward ever happened to George L. Hartford. Photographs show a stolid man, with a mustache and a head of thick gray hair, wearing a black suit, with the jacket fully buttoned over a vest, necktie, and white shirt. Now in his fifties, he drove the twelve miles from his Montclair home to the office in Jersey City six days a week and then drove back home in the evening. His personal life revolved around his wife, Josephine; his stepdaughter, Mabel; and Mabel’s husband, Sheldon Stewart, who ran a real-estate company in Newark. Sunday outings frequently included visits to his mother, four miles away in Orange, until her death in 1925. George occasionally dined with his company’s managers, but there is no record of him ever attending any society event in New York City. The notable events on his social calendar seem to have been the Montclair Junior League’s annual fund-raising show and, from 1926, the Montclair Horse Show, of which Sheldon Stewart was a director. Josephine was a long-standing parishioner of St. James Catholic Church in Newark, but George was not known as a churchgoer. He never held a passport; his travels seem to have taken him no farther than the New Jersey shore hotels where he spent his summer vacations, just as his father had. He was, as
Fortune
magazine later described him, an “implacably conservative” man.
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John’s situation was rather different. In 1915, he and his wife, Pauline, separated after twenty-two years of marriage. The proximate cause was a red-haired young woman named Frances Bolger, who had come to the Hartfords’ country home in Valhalla, north of New York City, to model gowns for Pauline. “He flirted with me over his wife’s shoulder,” Frances alleged later. Pauline embarked on round-the-world travels, riding a camel at the Great Pyramid and crossing the Pacific aboard the liner
Wilhelmina
to visit China and Japan before obtaining a divorce in 1920. John moved into a town house on West Fifty-fifth Street, but spent much of his time on the road, tending to the affairs of his burgeoning company, while continuing to raise prizewinning horses at Valhalla. Frances, who lived in the Hotel Berkley in New York, seems to have been an occasional diversion. Apparently, she wanted more. On June 28, 1923, the couple was secretly married in Danbury, Connecticut, not far from Valhalla. The marriage lasted all of six months. On December 27, John walked out. The story landed in the papers in July 1924, when Frances sued for alimony. Her lawsuit, filled with colorful detail, was met with silence from John. A divorce was quietly arranged, and the press soon lost interest.
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In September 1924, John applied for his first passport. He used it to visit Paris, where he and Pauline were remarried on April 4, 1925. Pauline apparently extracted certain commitments, for John resumed married life, at age fifty-three, with a newfound attention to leisure. Henceforth, the society pages would report his and Pauline’s transatlantic voyages and their winter visits to Palm Beach. He bought a boat and cruised in the Atlantic. During the horse show each November, the Hartfords threw an elaborate dinner, the guest list printed in the papers. And in 1926, he and Pauline began transforming the country house in Valhalla into an estate fit for a magnate. Sitting on 310 acres in Westchester County, Buena Vista Farms included stables, a golf course, a polo field, and a twenty-nine-room Tudor mansion with gold bathroom fixtures and a private screening room. The house was an easy commute from New York City. John and Pauline took an eight-room apartment at the Plaza Hotel as their main residence and used Buena Vista Farms as a summer home. After 1927, when Great Atlantic & Pacific moved its head office into the Graybar Building, adjacent to Grand Central Terminal, John could go directly from his twenty-second-floor office to the train and be at Buena Vista Farms in forty-five minutes.
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The unexpected death of John’s older brother Edward in June 1922 held yet more potential for commercial damage. Edward, his wife, Henrietta, and their two children, Josephine and Huntington, had moved from Park Avenue to an estate in Deal, a wealthy enclave on the New Jersey shore. According to family lore, Edward was a practicing Christian Scientist and refused to see a doctor when he fell ill, contributing to his death at age fifty-two. The family was evidently embarrassed by the circumstances. Although Edward was well-known as an inventor and manufacturer who had been prominent in New York society, the only notice of his death was a four-line announcement in
The New York Times
, stating that the funeral would be private.
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Under other circumstances, the two separations, two divorces, three marriages, and lavish new lifestyle of one of the nation’s wealthiest men and the shocking death of his independently wealthy brother would have furnished months of tabloid titillation. The Hartfords’ private affairs, however, drew surprisingly little public notice. And if they were aware of the Hartford family’s affairs at all, shoppers seem not to have connected them with the neighborhood store where they shopped every day. The trade of the Great Atlantic & Pacific seems not to have been affected in the least.

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Though it had several times the sales of any other grocery company, the Great Atlantic & Pacific Tea Company was in no sense a modern business. Its five thousand stores were tiny: just one of the vast supercenters that flourished at the end of the twentieth century had as much floor space as three hundred A&P Economy Stores. Where the average grocery store at the end of the twentieth century carried perhaps forty thousand different items, the average A&P, circa 1921, stocked only a few hundred. Some A&P stores allowed self-service, but usually the goods were kept out of customers’ reach, behind the counters, and store clerks retrieved each can of soup or bag of coffee as the shopper made her selections.

A&P stores rarely carried meat, fish, or milk, except in cans. “Of produce commodities they handle only butter, eggs, potatoes, and some eating apples in season,” one researcher found. Keeping fruits and vegetables in good condition as they passed through a complex distribution system was a problem no chain retailer had solved, but there was an entirely different reason to avoid them. The toughest task facing the executives of a retail chain was monitoring the work of store managers, who had ample opportunity to steal from the till, help themselves to the merchandise, or hurt the company’s reputation by neglecting the store. The sale of nonperishables was fairly easy to keep track of: if the store had received three cases of cigarettes, three cases should have been sold, and missing merchandise could be deducted from the manager’s pay. Perishables, however, could be rendered unsalable for any number of reasons, from delays in delivery to extremely hot weather to the store manager’s failure to care for the products. If a manager’s weekly report had indicated that fifty pounds of pears went unsold, there would have been no practical way for the company to determine the cause. Monitoring perishable products was such a daunting task in the early 1920s that most grocery chains, including A&P, avoided selling them.
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Its limitations notwithstanding, the Great Atlantic & Pacific possessed important advantages over its competitors in the grocery trade. Its wide footprint made A&P the only grocer that could use national magazine advertising effectively, an edge the Hartfords exploited in 1920 by mounting the first-ever national ad campaign by a grocer; it may well have been William G. Wrightson, vice president for advertising and husband of George and John’s niece, who came up with the idea of portraying A&P as “the little red school house of American retailing.” Volume discounts from food processors provided a significant advantage by allowing A&P to buy its goods more cheaply than other grocers, especially when suppliers were willing to circumvent wholesalers and sell directly to the retailer at wholesale prices. Most critical of all, by blanketing cities with stores—there were three hundred in Chicago alone—A&P gained powerful economies of scale. With geographic concentrations of stores, the company could run its own warehouses and delivery trucks, which in turn let it manage inventory efficiently. On average, grocery products took more than four months to get from factory to consumer in the early 1920s, and the financing charges and storage costs had to be built into retail prices. A&P, in contrast, turned its inventory once every five weeks. With comparatively few goods sitting in storage at any given time, it enjoyed much lower costs than independent grocers.
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