Anti-Chain Store Movement during the 1920s & 1930s
In the recent past, there has been a renewed energy in mobilizing resources with the aim of challenging the political and economic muscle of single corporations. Companies such as Wal-Mart have come under pressure from watch groups for cannibalizing retail and wholesale stores. While it is unprecedented to have so many calls for reforms, the mounting of the fight against large scale corporate retailing has been there in the history of the United States. In essence, 75 years ago, there erupted protests against chain stores as more and more wholesale and retail shops lost their footing to large-scale retail companies. This paper seeks to shed light on the anti-chain movement during the 1920s and 1930s with the aim of providing historical parallels and information that may otherwise be useful to contemporary campaigners.
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The history of chain stores can be traced back to the nineteenth century, when the Great Atlantic and Pacific Tea company was opened. Soon after opening, the company widened its offering to spices and coffee eventually giving a full line of groceries. Until the earlier 20th century, the chain stores had gained popularity growing in significant numbers after the World War I. During this time, the total number of stores by these organizations was less than ten thousand, but this number shot to over 37 thousand by the end of the decade . The main argument used by these stores in their defense was that they efficiently provided the public with low-priced products which, in turn, helped create unprecedented prosperity. Thus, the main theme that these stores promoted was a mass distribution in an economy that was now characterized by mass production. Local merchants became threatened by the new trend and accusations that chain stores were undermining the American street life to surface. Chain stores were seen as destroying smaller establishments which, in the eyes of many, was integral to the survival of the local community. They were also accused of defrauding consumers with shoddy merchandise and short weights as well as raising prices immediately after capturing a market.
Campaigners argued that corporate retailing was transferring profits to other places benefitting only few people as opposed to the local communities. Independent retailers started to get the support of prominent individuals and hodgepodge organizations which had started to get concerned about the growing power of large-scale retailers. Included in this list were labor unions, farmers, congressmen, and the Ku Klux Klan. The latter feared that corporate retailers were a threat to white communities who had outside influences. On their part, the farmers feared that these stores would push down the prices of agricultural products. The unions, on the other hand, were opposed to the low wages and the long working hours that stores subjected their workers to . Similarly, unions accused chain stores of putting pressure on their suppliers which by extension acted to bring wages in the manufacturing sector down. Influential personalities such as Wright Patman, then a congressman from Texas questioned whether chain stores, while destroying independent merchants, were actually saving consumers on their purchases. In a speech that was meant to be critical to A&P, Patman argued that chain stores had a tendency to raise prices once they established themselves in a market and accumulate profits to destroy more merchants in other localities . He argued that unfair competition brought about by an increase in the number of these stores was injurious to independent merchants who were left to move to new markets only to be destroyed again when the new markets became economically stable. Further, Patman warned that the government was spending billions of dollars every year trying to fight short weights in the country.
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The anti-chain stores movement is best understood as a product of populist antimonopolism which combined economic and political perspectives deeply engraved in the antimonopoly tradition. In taking advantage of the antimonopoly tradition, independent merchants, who were at the grassroots level, presented their case in a manner typically associated with producer politics as opposed to consumer politics. Congressmen such as Patman and Huey Long attacked big corporations of draining the local communities of their profits . While the efforts of these campaigns weakened the antimonopoly tradition, it did not kill it altogether. Patman particularly detested large corporations which he considered to be monopolizing capital which, in turn, victimized the farmers. He argued that monopoly in the banking and the retail sectors only led to creation of more monopolies in other sectors which increased the problems experienced by small-town merchants . For example, he accused the federal tax commission of creating a cottonseed cartel by allowing cottonseed dealers to fix bids while discouraging commodity warehousing aimed at withholding crops up to a time when prices would go up.
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The anti-chain stores movement held that retailing corporations were sending profits out of the local communities to a common center which, in this case, was the Wall Street. In turn, the stores were closing the door of opportunity to future businesspeople. It was forecasted that chain stores would eventually foster and economic system in which personal incentives and individual initiatives would be killed. Among the campaigners, it was highly accepted that if the chain stores remained unchecked or uncontrolled, then the people who owned them would conduct them without regard to the common good, not to mention that they would also exert their influence on the government for the betterment of their interests. Power and economic organization would, in this case, be translated into arbitrary political power. There were calls to outlaw advertising allowances, brokerage payments, and quality discounts by the federal trade commission. The Patman-Robinson bill was introduced to this effect and aimed at restricting and restraining tendencies towards monopoly. Independent merchants were opposed to price competition and the unlimited number of competitors . However, critics of the new bill argued that the bill would victimize consumers by eliminating price competition and fixing prices. The bill was finally passed into law in 1936 by the Congress. As evidence that small retailers were enthusiastic about fixing prices, independent merchants also demanded a national law be established exempting certain price maintenance pacts from antitrust prosecution. This fact culminated in the Miller-Tydings law which promoted fixing of prices by the states.
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There were also strong calls to establish a law which would levy taxes on stores. While opponents of the law argued that it was aimed at eliminating chain stores, proponents claimed that the law was simply aimed at establishing such a tax would not destroy them but would merely reduce the number of stores that each chain owned and empower the locals to participate in the retailing business. This law would help redistribute wealth to the hands of the locals and deter the destruction of independent retailers by absentee ownership of chain stores. In a way, it was depicted as a cultural war between the chain stores and small-town merchants who felt that the stores were colonizing them. Despite this, the law on taxing chain stores failed due to the opposition it garnered from the critics. On the one hand, it was argued that the law, if passed, would curtail produce distribution and bring down consumption by raising the price of products in the chain stores . On the other hand, critics argued that enacting the law would lead to unemployment. There was a clear division among the liberals as whether to lower the prices of products for the consumers or to protect independent retailers. In this context, the number of local retailers injured by chain stores was thought of a relatively low as compared with the number of consumers who were saved by the stores.
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Despite the proliferation in the number of anti-chain store legislation, the momentum began to reverse as people started to question the constitutionality of these legislations. Slowly, chain stores had, to a certain extent, managed to kindle a successful war against restrictions. In this context, chain stores started using public relations, counter campaigns, and organization in an effort to sway public opinion in their favor. A California ballot initiative was defeated as a result of the new efforts and the anti-chain stores momentum was reduced significantly . This event helped in preventing the proposed progressive tax bill from becoming a law. After the World War II, the anti-chain stores campaigns became less aggressive and acts enacted as part of the campaign started to lose their power .
As is with the success of the anti-chain stores movement, its abrupt failure can be attributed to its success in propaganda, public relations, and organization. With the help of massive media onslaught, independent retailers developed a powerful movement to fight the uptake of local economies by chain stores . On their part, the chain stores maintained strong economic arguments which, among other things, were based on low-pricing and job creation. It is worth noting that the media campaigns established by opponents of chain stores bore some fruits in terms of mitigating the economic justifications used by the chain stores to defend their case. In essence, the propaganda passed by opponents of the stores was successful, albeit, in the beginning, to paint a negative picture of the stores. This propaganda was mainly based on populist and localist arguments . Individual economic interests were also incorporated in the media campaign which further increased the popularity of the movement.
On the other extreme, the organization, allies, and propaganda used by the anti-chain movement also turned out to be the source of demise. With the help of public relations organizations, chain stores were able to find friends and allies with groups which were sympathetic to their interests. The stores started to mount their own propaganda campaigns with the help of these organizations which, in turn, diverted public opinion in their own favor. This fact reversed the effects of the anti-chain movement on the public. The economic arguments advanced by the stores coupled with the new found support reinforced the popularity of the chain stores while defining the fall of the anti-chain stores movement.
In conclusion, the emergence of chain stores in the late 19th century presented a blow to the independent retailers as they started to lose business to the new, large-scale retailers. Soon, independent retailers started to feel the pinch of the new trend as consumers opted to buy from the stores since their products were low priced. However, the growth in the popularity of the stores also came with opposition from independent retailers and their supporters. They purported that the new stores stole profits from the local market and sent the same to a common center. Further, it was argued that chain stores offered products for a low price only to hike the price once they got a strong hold in the market. These sentiments, among others, led to the establishment of the anti-chain stores movement which was successful in advocating for a number of legislations aimed at protecting local retailers from chain stores.