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

by Marc Levinson

  10. U.S. Bureau of the Census, Statistical Abstract, 1952 (Washington, D.C., 1952), 726; Progressive Grocer, September 1947, 86. The number of supermarkets in 1941 is necessarily an approximation, as there is no precise definition of “supermarket.” One of the suburban communities with robust population growth was Orange, New Jersey, where the large home George H. Hartford had built in the late 1860s was torn down in 1948, to be replaced by an apartment complex; see “Geo. Hartford, Head of A&P, Dies at Age 92,” Montclair (N.J.) Times, September 26, 1957.

  11. Applebaum, “Adjustment of Retailing to 1941 Conditions,” 440; Progressive Grocer, March 1945, 169, 162; September 1945, 96; March 1949, 57.

  12. Moss, “Constructing the Supermarket,” typescript; Deutsch, “From ‘Wild Animal Stores’ to Women’s Sphere”; Progressive Grocer, Self-Service Food Stores (New York, 1946), 17; Paul Levasseur and Carrol Waldeck, “Consider These Points if You’re Making Plans to Modernize,” Progressive Grocer, October 1948, 65; Charles W. Hauch, “Prepacking of Fruits & Vegetables Reduces Waste, Saves Labor,” Progressive Grocer, March 1946, 62.

  13. Progressive Grocer, September 1946, 85, and October 1946, 194; Rentz, “Death of ‘Grandma,’” MS, 64; A&P, “The Feeders Primer” (New York, 1937), HFF; Arnold Nicholson, “More White Meat for You,” Saturday Evening Post, August 9, 1947, 12; Bugos, “Intellectual Property Protection in the American Chicken-Breeding Industry,” 139; “Adequate ’47 Food Supply Is Forecast by Hartford,” NYT, December 26, 1946; “Economy, Service Held Grocers’ Aim,” NYT, December 24, 1947; “A&P President Says Grocers’ Inventories Are Healthiest in Years,” WSJ, December 24, 1947; Shane Hamilton, “The Economies and Conveniences of Modern-Day Living: Frozen Foods and Mass Marketing, 1945–1965,” Business History Review 77 (2003), 36–37; Progressive Grocer, October 1952, 115.

  14. Patman’s speeches bore titles such as “How A&P Beat the Chain-Store Tax Bill—Now It Can Be Told,” Congressional Record, September 19, 1945, H.R. 4200, 79th Cong., introduced September 27, 1945. Critical letters from the Commerce and Treasury departments are in RG 56, General Records of the Department of the Treasury, Central Files of the Office of the Secretary of the Treasury, 1933–56, box 134, NARA-CP; Robert L. Doughton (chairman, Ways and Means Committee) to Patman, June 21, 1949, box 847A, WPP; Richard R. Haas to Patman, memo, September 30, 1949, box 102(A), WPP; Suzanne Manfull to Patman, October 10, 1949, box 102(A), WPP; J. R. Alexander to Patman, September 17, 1949, box 37(C), WPP.

  15. Robert K. Walsh, “Uncle Sam, A&P, and John Q. Public,” Washington, D.C., Sunday Star, December 4, 1949; “Democrats Happy over Minton’s Rise,” NYT, September 16, 1949.

  16. “Anti-trust Suit Asks A&P Be Split,” WSJ, September 16, 1949; Walsh, “Uncle Sam”; Cabell Phillips, “U.S. Versus the A&P: The Two Arguments,” NYT, December 11, 1949. For a legal analysis in support of the government’s position, see Hirsch and Votaw, “Giant Grocery Retailing and the Antitrust Laws.”

  17. Douglas Larsen, “Vast Propaganda War Spurred by A&P Suit,” New York World-Telegram, November 9, 1949; “McGrath Defends Anti-trust Actions in Food Industry,” WSJ, March 14, 1950; Bergson, “The Antitrust Laws and the A&P Case,” speech to Operation Incorporated, October 19, 1949, Chicago, and “Statement by Assistant Attorney General Herbert A. Bergson,” October 12, 1949, both in RG 60, General Records of the Department of Justice, Antitrust Division, Enclosures to Classified Subject Files, 1930–87, Class 60 enclosures, box 23; “U.S. Aim Cited in A&P Suit,” NYT, October 21, 1949; Collier’s, November 26, 1949.

  18. “The A&P Case—and the Trade’s Reaction,” Progressive Grocer, October 1949, 54; Washington News, October 31, 1949; Larsen, “Vast Propaganda War”; World Telegram, October 28, 1949; James A. Williams, “Economy Is Sound, Sales Group Told,” NYT, December 4, 1949. Among Patman’s speeches are “A&P Falsehoods Blanket the Nation,” Congressional Record, October 26, 1949; and “A&P’s Nation-Wide Propaganda Campaign,” Congressional Record, March 20, 1950.

  19. Walsh, “Uncle Sam”; Harry Borton to J. Howard McGrath, October 10, 1949, and Edmund A. Nelson to McGrath, October 14, 1949, RG 60, General Records of the Department of Justice, Antitrust Division, Enclosures to Classified Subject Files, 1930–87, Class 60 enclosures, box 23; “Senate Quiz Told A&P Gets Rebates,” NYT, December 14, 1949; “Voters Side with A&P in U.S. Suit,” World-Telegram, November 21, 1949.

  20. “A&P Files Reply, Denying Monopoly,” NYT, April 11, 1950. See, for example, Chicago Tribune, May 12, 1950; Mrs. Otis Cutler to McGrath, May 2, 1950, and Nathan Helms to Truman, May 2, 1950, both in RG 60, General Records of the Department of Justice, Antitrust Division, Enclosures to Classified Subject Files, 1930–87, Class 60 enclosures, box 79; E. C. Cornelius (McKinney, Texas) to Rayburn, June 8, 1950, and Raymond Graves (Melissa, Texas) to Rayburn, May 17, 1950, both box 3R369, SRP; H. D. Jackson to Patman, n.d., and Patman to Jackson, May 25, 1950, both box 37(C), WPP.

  21. “Bergson Resigns as ‘Trust Buster,’” NYT, September 15, 1950.

  22. “Red Circle and Gold Leaf,” Time, November 13, 1950; “Letter from the Editor,” Time, May 5, 1954; “Hartford Predicts Ample Food Supply,” NYT, December 29, 1950; Toney Terry Hatfield, “Boss Hartford of the A&P,” Coronet, May 1951, 94.

  23. “Attacks on Bigness Declared Unwise,” NYT, January 15, 1951; Schwegmann Brothers v. Calvert Distillers, 341 U.S. 384, May 21, 1951; Jaffe, “The Supreme Court, 1950 Term.”

  21: THE FALL

  1. “John A. Hartford Dies in Elevator,” NYT, September 21, 1951; “O.W.S. Biography—Notes from 1951 Through 1960,” HFF; “400 Attend Funeral of John A. Hartford,” NYT, September 25, 1951; “Mrs. John A. Hartford,” NYT, September 6, 1948; “$55,605,290 Estate to Pay Small Tax,” NYT, June 30, 1954.

  2. “D. T. Bofinger Promoted,” NYT, February 7, 1949; “Bofinger Spurred on Coffee Data,” NYT, December 8, 1949; “David T. Bofinger, President of A&P,” NYT, December 20, 1949.

  3. “Who’s News,” NYT, June 13, 1950; Robert E. Bedingfield, “Personality: Wary Empire Builder at A&P,” NYT, January 11, 1959; testimony of Charles W. Parr, head of A&P field buying offices, at Danville trial, Tr 199.

  4. “Fair Trade Called Price Fixing Cloak,” NYT, February 14, 1952; “President Accepts Resignations of Two,” NYT, June 26, 1952; U.S. v. New York Great Atlantic & Pacific Tea Co., Civil Action 52-139 (S.D. N.Y., January 19, 1954), 1954 U.S. Dist. Lexis 3678; “Food Chain Offers Consent Decree in Anti-trust Suit,” WSJ, April 6, 1953; “U.S. and A&P Settle Anti-trust Suit,” WSJ, January 20, 1954.

  5. Market-share estimates are from Progressive Grocer, July 1952, 134.

  6. George Melloan, “Supermarket Surge: Bigger, Frillier Stores Rise Across Land in Record Building Boom,” WSJ, October 19, 1953. The 1954 tax law allowed extremely rapid depreciation of commercial buildings, providing developers with large amounts of tax-free income for the first ten to fifteen years of a building’s life; see Thomas W. Hanchett, “U.S. Tax Policy and the Shopping-Center Boom of the 1950s and 1960s,” American Historical Review 101 (1996), 1082–1110. The queen visited the Giant supermarket in Hyattsville, Maryland, on October 19, 1957. On evening hours, see Progressive Grocer, April 1952, 114.

  7. U.S. Bureau of the Census, 1958 Census of Business, vol. 1, Retail Trade—Summary Statistics (Washington, D.C., 1961), 2-4, 2-17, 3-4. In 1958, 80 percent of all food stores, excluding seasonal farm stands, had three or fewer paid employees. On store owners’ income, see Progressive Grocer, November 1954, 43, 54.

  8. As late as 1959, Burger defended the decision not to expand in the West and the Southwest with the comment, “It’s silly to Pioneer too much. Once you get out of Chicago, people have to drive for miles and miles to get to densely populated areas as we know them here.” See Bedingfield, “Wary Empire Builder at A&P.”

  9. In 1953, the average supermarket lease at a shopping center lasted 10 years, with two five-year renewal options, and fixed the rent at 1 percent of sales. Stores at non-shopping-center locations typically h
ad 10-year leases and fixed-dollar rents. By 1959, the vast majority of new supermarkets had leases of 15 years or more. A&P’s average during this period is unknown, but in 1971 its average lease commitment was 5.8 years, far less than its competitors’. Progressive Grocer, January 1954, 83, and March 1960, 130; “A&P—1972,” Harvard Business School Case 9-27-114, 1972.

  10. Melloan, “Supermarket Surge”; Progressive Grocer, February 1952, 70; October 1952, 116; November 1951, 14; May 1954, 144; and April 1960, F3.

  11. Progressive Grocer, July 1953, 105, and September 1953, 38; Charles E. Egan, “Brownell Scores ‘Fair Trade’ Laws,” NYT, April 2, 1955; “Discount Houses Strengthen Grip,” NYT, January 3, 1956; Cox v. General Electric, Supreme Court of Georgia, January 10, 1955, 222 Ga. 286; Union Carbide and Carbon Corp. v. White River Distributors, Supreme Court of Arkansas, February 7, 1955, 224 Ark. 558; McGraw Electric v. Lewis & Smith Drug Co., Supreme Court of Nebraska, February 11, 1955, 159 Neb. 703.

  12. “George Hartford of A&P Dies at 92,” NYT, September 25, 1957; “Geo. Hartford, Head of A&P, Dies at Age 92,” Montclair (N.J.) Times, September 26, 1957.

  13. “Hermit Kingdom: The Isolated A&P Eases Its Border Guard After a Subtle Struggle,” WSJ, December 12, 1958.

  14. “A&P Proposes to Revise Set-Up,” NYT, November 7, 1958; “Evolution at A&P,” NYT, November 8, 1958; “Big Public Offering of Stock in A&P Set by Hartfords,” NYT, March 5, 1959; “Two A&P Holders to Sell 1,800,000 Shares to Public,” WSJ, March 5, 1959; “A&P 1,800,000-Share Secondary Offering on Market Priced at $44.50,” WSJ, March 25, 1959.

  15. “Hermit Kingdom.”

  16. “How Goliath Grew: A&P’s Saga Includes a Pagoda, Price Wars, and Buying Brigades,” WSJ, December 19, 1958; “Votes at A&P,” Time, December 22, 1958; Bedingfield, “Wary Empire Builder at A&P.”

  17. Gross profit figures through 1943 were revealed in the Danville trial exhibits and reported in Adelman, A&P, 436. Gross profit figures for 1962–70 are in “A&P—1972.” “A&P Ends Ban on Trading Stamps,” WSJ, January 27, 1960; “A&P to Start Issuing Trading Stamps in More of Its Grocery Stores,” WSJ, January 30, 1962; Progressive Grocer, December 1963, 52, and April 1963, 6.

  18. Tedlow, New and Improved, 250; Progressive Grocer, Facts in Grocery Distribution (1962), 13; Progressive Grocer, February 1962, 102, and April 1962, 56; James J. Nagle, “Most Food Chains Limit Side Lines,” NYT, March 6, 1960; James J. Nagle, “Food Chains Turn to Discount Field,” NYT, September 3, 1961; “A&P Called Interested in Food Concession of a Proposed Discount Store in Illinois,” WSJ, August 30, 1961; “California Firm Says It Is Discussing Drug Units at Some A&P Stores,” WSJ, October 18, 1961; “A&P Plans General Store Next to a Supermarket,” WSJ, March 15, 1962; “A&P Closes Test Store Retailing Nonfood Items,” WSJ, April 1, 1964.

  19. “Public Holders Attend A&P Annual Meeting for 1st Time, Told Dividend May Be Raised,” WSJ, June 5, 1959; “A&P Says It Won’t Increase Prices to Get Higher Profits; 1st Fiscal Period Net Fell,” WSJ, June 22, 1960.

  20. Progressive Grocer, April 1960, F13; October 1961, 42; October 1965, K12, K32.

  21. “John D. Ehrgott Elected A&P President Despite Protest by All 6 Outside Directors,” WSJ, January 25, 1963; “Revolt Against Age,” Time, February 1, 1963.

  22. Robert E. Bedingfield, “Hartford Will Sell A&P Shares,” NYT, June 8, 1966.

  23. Vartanig G. Vartan, “Quiet Evolution Noted at A&P,” NYT, June 28, 1964; “A&P Sales Drop 2.6% in Quarter,” NYT, July 10, 1964; Dan Dorfman, “Heard on the Street,” WSJ, August 22, 1968; “Foundation Rejects Data Processing Bid,” WSJ, December 11, 1968; Ernest Holsendolph, “Gulf & Western Bids for A&P Stock,” NYT, February 2, 1973; Ernest Holsendolph, “Gulf & Western Draws New Rebuff on A&P Bid,” NYT, March 13, 1973.

  24. Fred M. Hechinger, “U.S. Foundations Worth 11 Billion,” NYT, July 11, 1960; Leonard Sloane, “Crucial Year for Chain,” NYT, February 5, 1973; Jacobson, Greatest Good, 3, 235; “Hartford Foundation Asks A&P to Plan a Stock Sale,” NYT, May 1, 1976; “Market Place,” NYT, July 6, 1976.

  25. “Tengelmann Pursuing Mergers,” NYT, January 20, 1979; “Tengelmann Unit Buys A&P Shares,” NYT, February 22, 1979.

  22: THE LEGACY

  1. A&P filed for protection under chapter 11 of the U.S. Bankruptcy Code on December 12, 2010.

  2. On consolidation in the manufacturing sector, see Naomi R. Lamoreaux, The Great Merger Movement in American Business, 1895–1904.

  3. McGrath’s speech to the United States Wholesale Grocers’ Association, quoted in Progressive Grocer, April 1950, 162.

  4. For an attempt to analyze the economic benefits of entrepreneurship in a rigorous fashion, see William J. Baumol, The Microtheory of Innovative Entrepreneurship.

  5. 57 F. Supp. 635, 664.

  6. James W. Gruebele, Sheldon W. Williams, and Richard F. Fallert, “Impact of Food Chain Procurement Policies on the Fluid Milk Processing Industry,” American Journal of Agricultural Economics 52 (1970), 395–402, found, for example, that vertical integration in milk processing resulted in fewer but larger dairy plants. The economics of vertical integration subsequently changed in ways disadvantageous to A&P. In 1965, the company opened the world’s largest food-processing plant in Horseheads, New York. The Horseheads plant, with 1.5 million square feet under a single roof, was A&P’s first large investment in food manufacturing in decades. It made 550 different products, from canned soup to mayonnaise, all for sale under the trusted Ann Page name. But the rise of television advertising in the 1950s had given a boost to brand-name foods and dulled the appeal of store brands such as Ann Page. As A&P responded to declining sales by closing stores, the Horseheads plant was badly underutilized. It was finally abandoned in 1983. In a neat historical irony, part of its site was later occupied by a retailer that decided not to integrate vertically into manufacturing: Walmart. “Wal-Mart to Hold Grand Opening,” Corning (N.Y.) Leader, February 28, 2008, www.the-leader.com/news/business/x2052202396, accessed June 10, 2010.

  7. On the Illinois banking laws, see www.obre.state.il.us/cbt/STATS/br-hist.htm, accessed June 30, 2010; Tara Rice and Erin Davis, “The Branch Banking Boom in Illinois: A Byproduct of Restrictive Branching Laws,” Chicago Fed Letter, May 1, 2007. Colorado’s motor vehicle dealer statute, Colorado Statutes 12-6-120.5, is one of many that bar manufacturers from selling cars to the public. “Liquor Initiatives Stir Up Old Dispute,” Seattle Times, August 21, 2010. Alabama’s ban on self-distribution by brewers can be found in Title 28, Chap. 9 of the state code. On professional licensing, see Stephanie Simon, “A License to Shampoo,” WSJ, February 7, 2011.

  8. There is an extensive literature on the industrialization of food, explored most eloquently in Michael Pollan, The Omnivore’s Dilemma (New York, 2006).

  9. Among the studies comparing chain and independent grocery prices, see FTC, Chain Store Inquiry: Prices and Margins of Chain and Independent Distributors, Vol. 4 (Washington, D.C., 1933 and 1934); Paul D. Converse, “Prices and Services of Chain and Independent Stores in Champaign-Urbana, Illinois,” NATMA Bulletin, October 1931; James L. Palmer, “Economic and Social Aspects of Chain Stores”; Phillips, “Chain, Voluntary Chain, and Independent Grocery Store Prices, 1930 and 1934”; Taylor, “Prices in Chain and Independent Grocery Stores in Durham, North Carolina,” 413.

  10. Data in U.S. Bureau of the Census, Historical Statistics of the United States, 324, show that food spending in 1934–35 came to one-third or more of income for households with annual incomes below $1,500, a definition that took in sixteen million households. Per capita consumption and nutrition are in ibid., 328. On inner-city grocery prices, see Donald E. Sexton Jr., “Comparing the Cost of Food to Blacks and to Whites—a Survey,” Journal of Marketing 35 (July 1971), 45.

  11. Numerous books explore such claims against Walmart; see, for example, Charles Fishman, The Wal-Mart Effect; Nelson Lichtenstein, The Retail Revolution: How Wal-Mart Created a Brave New World of Business; Nelson Lichtenstein, ed., Wal-Mart: The Fa
ce of Twenty-First-Century Capitalism; and Ellen Ruppel Shell, Cheap: The High Cost of Discount Culture.

  BIBLIOGRAPHY

  BOOKS

  Adelman, M. A. A&P: A Study in Price-Cost Behavior and Public Policy. Cambridge, Mass.: Harvard University Press, 1966.

  Albion, Robert Greenhalgh. The Rise of New York Port, 1815–1860. New York: Charles Scribner’s Sons, 1939.

  Alter, Jonathan. The Defining Moment: FDR’s Hundred Days and the Triumph of Hope. New York: Simon & Schuster, 2006.

  Anderson, Avis H. A&P: The Story of the Great Atlantic & Pacific Tea Company. Charleston, S.C.: Arcadia, 2002.

  Anderson, Oscar E. The Health of a Nation: Harvey W. Wiley and the Fight for Pure Food. Chicago: University of Chicago Press, 1958.

  Arnold, Thurman W. The Bottlenecks of Business. Washington, D.C.: Reynal and Hitchcock, 1940.

  _____. The Folklore of Capitalism. New Haven, Conn.: Yale University Press, 1937.

  Bacon, Albion Fellows. Beauty for Ashes. New York: Dodd, Mead, 1914.

  Barger, Harold. Distribution’s Place in the American Economy Since 1869. Princeton, N.J.: Princeton University Press, 1955.

  Baumol, William J. The Microtheory of Innovative Entrepreneurship. Princeton, N.J.: Princeton University Press, 2010.

  Baxter, William. Chain Store Distribution and Management. New York: Harper & Brothers, 1928.

  Beckert, Sven. The Monied Metropolis: New York City and the Consolidation of the American Bourgeoisie. Cambridge: Cambridge University Press, 1993.

  Belasco, Warren, and Roger Horowitz, eds. Food Chains: From Farmyard to Shopping Cart. Philadelphia: University of Pennsylvania Press, 2008.

  Brinkley, Alan. The End of Reform. New York: Random House, 1995.

  _____. Voices of Protest: Huey Long, Father Coughlin, and the Great Depression. New York: Vintage Books, 1982.