The Great A&P and the Struggle for Small Business in America (48 page)

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 the 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.