A Classification of American Wealth
History and genealogy of the wealthy families of America - Sponsors

 Part 1 : Colonial and Mercantile America  Part 2 : America in the Gilded Age
 Part 3 : America in the Twentieth Century  Encyclopedia of American Wealth

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  Part II-Chapter 9 : Merchant Princes  >   Index and Introduction :    « Previous  12 - 3    Next »

In the meantime, Rowland Hussey Macy had opened a fancy dry goods store on 6th Avenue. Introducing the then revolutionary principles of selling at fixed prices for cash only, Macy prospered and built his shop into a large department store. Others followed in other large cities : Marshall Field in Chicago (1865), Strawbridge & Clothier in Philadelphia (1868), John Wanamaker also in Philadelphia (1877), Joseph L. Hudson in Detroit (1881) and many more elsewhere. By the turn of the 20th century, department stores were common landmarks in all American metropoles and many, if not all, of their founders’ families had joined the ranks of America’s richest dynasties.

Not all prosperous merchants used the department store formula though. Some built equally impressive fortunes by staying true to their specialty yet expanding their stores to take the opportunity of a growing market. Charles Lewis Tiffany thus dedicated his life to serve New York’s elite, a class which grew exponentially during the Gilded Age, and built the largest jewelry store in the world, making himself a multi-millionaire. Similarly the W & J Sloanes specialized on carpets and soon supplied New York’s leading households with these most lucrative textile goods.

But the real big money lay in tending to masses of low and middle class consumers, who benefited from the raising purchasing power, the industrial revolution brought. Recognizing that whereas prime locations were difficult to find and increasingly expensive in large cities, shrewd merchants decentralized the concept of department stores and established their bargaining power by operating chains of stores in smaller cities. The concept was brought further by the “Nickel and Dime” or “5 and 10 cents” store moguls, whose leading figure was Frank Winfield Woolworth. Working in loose association with a number of friendly rivals, including his brother Charles and their cousin Seymour Horace Knox, he built a chain of over 300 stores until 1912, when he merged them with the other associates’ firms to form the $65 million F.W. Woolworth Company. His archrival Sebastian S. Kresge built an equally impressive empire of chain stores. George Huntington Hartford built an equally impressive chain of grocery stores under the Great Atlantic & Pacific Tea Company label.

Whereas department stores served the large cities and chain stores mushroomed in the smaller towns throughout America, other innovative merchandisers used the improved transportation infrastructure to address the farmers, a large hitherto neglected group of American consumers, directly. The formula was mail order and its inventor Aaron Montgomery Ward. Starting in 1872 with a list of 163 products on a single sheet, Montgomery Ward pioneered the mail order catalogue business, betting in particular on strong response among America’s farmers, then still the largest active community. The formula was successful and by 1883, the Montgomery Ward catalog featured 240 pages and 10’000 items. In 1888 Richard Warren Sears re-enacted the concept offering watches and silverware in a mail order catalog. Largely thanks to his superior advertising skills, Sears outdid Montgomery Ward by the turn of the century and Sears, Roebuck & Co became the largest mail order firm in the world.

With their natural talent for trading and merchandising, Jewish merchants, many of whom started as simple peddlers, took an increasingly important part in the development of America’s major retailing empires. In New York the Straus family acquired a share in Macy’s after running a successful crockery business on their own account in the basement of the famous department store. In 1896 they became the sole owners and architects of Macy’s meteoric rise thereafter.

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