The Great A&P and the Struggle for Small Business in America (6 page)

The new mayor was a mystery to almost everyone. His name had not been mentioned in the preelection speculation about candidates. In fact, the name of George H. Hartford is not to be found in any of the surviving records of Orange’s four newspapers prior to the date of his election as mayor. “We believe he has never before been a candidate for office, and was therefore unknown to a large portion of the community,” reported the
Orange Journal
. Nonetheless, the rabidly Republican weekly lavished praise on the new Democratic mayor. “There is every reason to believe that the new Mayor will prove an excellent and popular officer. He is a quiet and dignified gentleman, somewhat reserved in manner, and has the reputation of a competent, careful and trustworthy man.” Concurred
The
Orange Chronicle
, “We have a man who although untried, and heretofore not having taken an active part in the affairs of the city, is, we have every reason to believe, a gentleman of excellent business talent and much more than average executive ability.”
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Hartford took office two weeks later. His first task was to address the nine-member city commission. “I have been very unexpectedly called to this office,” he apologized, before calling for the city to improve its schools, strengthen its police department, and establish a water supply, a goal city leaders had discussed, but failed to accomplish, for several years. The mayor’s remarks, the
Orange Journal
declared, “will be satisfactory, we think, to our citizens generally, without distinction of party.” Hartford’s announcement that he would serve only a single one-year term, though, was not to be fulfilled. He was to serve as mayor continuously until 1890, and was repeatedly reelected without opposition.
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On April 15, 1878, three weeks after becoming the mayor, George H. Hartford became a partner in the Great Atlantic & Pacific Tea Company. The founder, George Gilman, had personal reasons for wishing to leave the business. In February 1877 he had retired to his estate along the Connecticut shore. Since that time Hartford had run the business day to day, meeting Gilman occasionally in New York or Connecticut. The partnership agreement gave Hartford ownership of the partnership’s assets and full management responsibilities, with the concern’s bank account to stay in Gilman’s name. At age forty-four, George H. Hartford assumed control of a company with $1 million in annual sales from the seventy stores of the Great Atlantic & Pacific Tea Company and the mail-order business of Great American. The partnership agreement was not put in writing, an omission that would come to cause considerable difficulty.
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4

THE GROCER

In 1880, at the age of fourteen, George Ludlum Hartford entered the employ of the Great Atlantic & Pacific Tea Company. He would work there for the next seventy-seven years.

George L., the eldest son and second-eldest child of George H. and Josephine Hartford, grew up in the rambling house on Ridge Street in Orange. There were now five Hartford children, including John, born in 1872, and Marie Louise, born in 1875. George H. Hartford’s parents, Joshua and Martha Hartford, lived with the family for several years, as did Josephine Hartford’s ailing brother, Louis, and two young servant girls. The 1880 census found the Hartfords hosting a “boarder,” the English-born “salesman” John E. Clews, aged twenty-four, who would marry Minnie, the eldest Hartford child, in 1881. And from 1878, a steady stream of visitors swept through the Hartfords’ parlors to confer with the mayor, providing the children with a taste of politics. One wonders whether it was his observation of his father’s experience in public life that led George L. to become such a very private man.
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Orange had no public library and only limited educational facilities in the 1870s. School construction would become Mayor Hartford’s chief accomplishment, but when George L. reached high-school age, the choices were few. Rather than sending their twelve-year-old son off to boarding school, George H. and Josephine enrolled George L. as a day student at St. Benedict’s College, a recently established preparatory school just down the railroad line in Newark, in 1878. St. Benedict’s offered a commercial course, but George L. attended the final two years of the school’s three-year classical program. In his brief time at St. Benedict’s, George demonstrated that he had a head for numbers, winning a prize in algebra. Although students in the classical program normally pursued further education, George’s schooling ended with the ninth grade, in 1880, when he went to work with his father. According to one version of his poorly documented life, he started by stoking the boiler in the store on Vesey Street but was soon made cashier at a store in Newark. From then on, he would spend almost his entire career tending the financial side of the business.
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The company young George L. Hartford joined was no longer a small enterprise. Great Atlantic & Pacific claimed to have 150 stores in 1880, in addition to Great American, which had become entirely a mail-order business. Guided by George Gilman’s flair for the extravagant, Great Atlantic & Pacific stores had developed into elaborate temples of tea and coffee, lavishly outfitted to appeal to increasingly status-conscious customers. Each store had a large red
T
, lit with gas jets, hanging over the sidewalk. Atop the door and the show windows stretched a wood panel announcing the Great Atlantic & Pacific Tea Company. Inside, beneath a pressed-tin ceiling, the walls were painted in vermilion and gold leaf, supposedly imported from China, and decorated with Chinese-style hangings. Gas chandeliers with sparkling cut-glass pendants provided bright illumination. Bins holding the many varieties of tea and coffee lined the selling floor, and packages of Thea-Nectar and ground coffee were stacked neatly behind the dark wood sales counter. Some stores even had a cockatoo, the company’s early mascot, on a perch in the center of the floor. To complete the theme of exotic Asia, the cashier’s station, located near the door, was shaped like a Chinese pagoda.
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George H. Hartford held complete managerial control over the business. There was, so far as is known, no successor to Gilman as marketer in chief, but his unorthodox marketing ideas may have been less important than in earlier times. By now, Great Atlantic & Pacific was a large-scale business, and promotional antics mattered less than conventional business skills like cost control and inventory management. This was George H.’s strength, but he had to make decisions with only rudimentary information. A store manager kept a simple ledger with two facing pages for each week. The left side listed each day’s sales and the weekly total, which was also broken down into “tea” (presumably including coffee) and “sugar.” The right side listed outlays, from twenty-five cents for resetting a horseshoe to the weekly salaries of $14.00 for the store manager, $10.00 for the clerk, and $3.50, probably for a boy who helped after school. The difference between receipts and expenditures, usually around $140, was remitted to the company each week. This accounting left store-level profitability unclear, as the store’s reported expenses did not include the cost of goods sold.
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Hartford hewed firmly to Gilman’s strategy of aggressive growth. By 1884, Great Atlantic & Pacific stores could be found as far west as Kansas City and as far south as Atlanta, in small towns as well as major cities. For rural customers, a network of wagon routes radiated from the stores, serving farms and villages across the eastern half of the country. A four-by-six-inch trade card of the sort widely used for advertising in the 1880s attests to the company’s geographic reach. It shows a straw-hatted black man, driving his family down a dirt road in a rickety mule cart, pulling the mule up short to read a signboard proclaiming, “The Great Atlantic and Pacific Tea Co’s Teas & Coffees are the best”—an indication that the company was marketing its wares even in remote corners of the South. That image, and others featuring bicyclists, baseball players, and inebriates who should have stuck to tea and coffee, may well have been selected by young George L. Hartford, who seems to have taken on such responsibility during a brief stint as a marketer in the early 1880s.
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Beneath the surface, though, a problem loomed. Great American and Great Atlantic & Pacific depended almost entirely on two commodities, coffee and tea. Sales of both had mushroomed after the Civil War, aided by repeal of the high tariffs enacted to finance the war. In 1864, Congress, desperate to raise revenue, had raised the duty on tea to twenty-five cents per pound—a tax roughly equal to the value of the tea itself—and the duty on coffee to five cents per pound. The tariffs were finally slashed in 1870 and eliminated in 1872, providing an enormous stimulus to consumption. In the 1870s, the average American drank one-third more tea each year than at war’s end, and coffee imports set new records. This tea and coffee boom must have been highly positive for A&P, helping the company reach $1 million in sales in 1878. But in the early 1880s, prices collapsed. The value of U.S. tea imports fell 40 percent in three years as import volume dropped by one-fourth. The average price of imported coffee plummeted from thirteen cents per pound in 1880 to eight cents in 1883. Although the company tried to promote its coffee with the claim that “by their new process of roasting, cooling, etc., the flavor is retained as it is by no other process,” it must still have faced the same uncomfortable economic facts as its competitors. Falling prices must have devastated all tea companies’ sales and profits, including those of the Great Atlantic & Pacific.
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*   *   *

George H. Hartford seems to have responded to the tea and coffee crisis in the only sensible way: by broadening the product line.
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The 1880s may have been terrible years for selling coffee and tea, but they were fabulous years for selling sugar. Previously, Americans had consumed little white sugar. Its high price had made refined sugar a luxury, so most people had used brown sugar, molasses, or sorghum syrup to sweeten their drinks and preserve their foods. As tariffs fell and new technology drove down refining costs after the Civil War, refined white sugar became all the rage. U.S. imports doubled between 1865 and 1869, and then, as tariffs fell away, rose by half during the 1870s. But it was only in the 1880s that Americans fully developed a sweet tooth. Through the decade, the federal government paid growers a bounty of two cents for every pound of sugar they produced in an ultimately unsuccessful effort to create a domestic industry that could meet the soaring demand for white sugar. Average consumption went from thirty-six pounds per person in 1877 to fifty-seven pounds in 1886.
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Great American and Great Atlantic & Pacific began selling sugar around 1880 and had an immediate hit. Sugar would have been an easy product for store clerks to sell; they would have handled it much like coffee or tea, pouring the bulk product from large bags into shop-floor bins and then serving customers by measuring out the desired quantity on a scale. It is likely that sugar helped the company survive the downturn in tea and coffee sales that killed off some of its competitors. At the Port Chester, New York, store, sugar accounted for about one-fourth of sales in 1882.
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Yet George H. Hartford would have been fully cognizant of sugar’s limitations. Like coffee and tea, sugar was just a commodity. Great Atlantic & Pacific’s fancy red stores were selling precisely the same product as every other grocery or general store. Gaining protection from changes in commodity prices would require something special, an exclusive brand similar to Thea-Nectar. That special product seems to have been baking powder. According to company tradition, George L., still a teenager, asked a chemist why baking powder was so expensive. Young Hartford had assumed the ingredients must be rare, but when the chemist explained otherwise, George suggested to his father that the company make its own. The back of one of the buildings on Vesey Street was soon curtained off, and a chemist was hired to mix the ingredients.
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Baking powder was a very controversial product in the 1880s. Invented in the 1850s, it allowed bakers to produce lighter cakes and faster-rising breads. This was an important innovation in a world in which most households did their own baking, and by the 1880s Americans were using an estimated fifty to seventy-five million pounds per year. All baking powders worked by inducing a chemical reaction between common baking soda and an acid to release carbon dioxide gas into batter, but they used different types of acids. The costliest powders contained acid tartrate of potassium, known as cream of tartar, a substance derived from grape juice. Cheaper powders used phosphoric acid or alum salts containing sulfuric acid, and usually produced less carbon dioxide per tablespoon of powder. The cream of tartar interests and the alum interests waged open warfare for four decades, with each side accusing the other of making impure or unsafe products.
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As food safety became a prominent issue, chemists started testing the composition of baking powders and found none that were what they claimed to be. Almost all powders contained starch as filler, and many contained a variety of salts as well. Consumers were justifiably frightened. “There appears to be ample ground for requiring that the makers of baking-powders should publish the ingredients,” New Jersey’s dairy commissioner opined in 1888. “At present, the only guaranty of an undoubtedly wholesome and efficient article appears to be the name of the brand.” George H. Hartford had reached the same conclusion several years earlier. Although the Great American Tea Company had started selling unbranded baking powder by mail as early as 1883, it was in 1885 that one-pound tins of baking powder, bearing red labels, became the first product sold under what would soon become a powerful brand name: A&P. To promote the new brand, the company printed cards carrying the endorsement of Professor R. Ogden Doremus of Bellevue Hospital Medical College. “I find on chemical analysis that your Baking Powder is composed of pure materials,” the famed chemist attested.
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