Merchant Princes: An Intimate History of Jewish Families Who Built Great Department Stores by Leon Harris, Kenneth Libo |, Paperback | Barnes & Noble
Merchant Princes: An Intimate History of Jewish Families Who Built Great Department Stores

Merchant Princes: An Intimate History of Jewish Families Who Built Great Department Stores

by Leon Harris, Kenneth Libo

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In delightfully entertaining style, Merchant Princes tells the fascinating stories of America's great Jewish storekeeping families - the Filenes of Boston, the Riches of Atlanta, the Marcuses of Dallas, and the Strauses of New York, among others - and how they rose from ordinary peddlers to keepers of general stores on the frontier, where bolts of cloth and


In delightfully entertaining style, Merchant Princes tells the fascinating stories of America's great Jewish storekeeping families - the Filenes of Boston, the Riches of Atlanta, the Marcuses of Dallas, and the Strauses of New York, among others - and how they rose from ordinary peddlers to keepers of general stores on the frontier, where bolts of cloth and hand-wringer washtubs were the primary merchandise, to creators of sumptuous retail emporiums where the tastes of the gilded age were set. Leon Harris describes the immigrants' first attempts at street peddling - often with a horse and cart - and vividly recreates the atmosphere of the frontier era when a Jewish storekeeper was often the only Jewish person in a remote, dusty town.

We are given a view of the social revolution that ensued when thousands of women became buyers for department stores, gaining newfound status and independence in an era when few opportunities beyond schoolteaching and domestic work were open to them. Leon Harris is a great storyteller, giving shoppers, devotees of nostalgia, and readers of American Jewish history a vibrant, anecdotal narrative that brings these pioneering families to life and reveals each family's triumphs and secrets, its scandals and successes.

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Kodansha International
Publication date:
Kodansha Globe Book Ser.
Product dimensions:
5.60(w) x 8.42(h) x 1.20(d)

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The Filenes of Boston

Lord, I ascribe it to thy grace,
And not to chance as others do,
That I was born of Christian race,
And not a Heathen or a Jew.
—Isaac Watts, Divine Songs for Children

Like Huck Finn, some present-day Fundamentalists believe that God wrote the Bible in English. But many of the early New England Puritan divines, who were also its scholars and political leaders, were Hebraists. In those days, every graduate of Harvard was required to be sufficiently fluent to read the Pentateuch in Hebrew at sight, and Yale included Hebrew as well as Latin in its seal. Ezra Stiles, as president of Yale, delivered his inauguration speech in 1778 in Hebrew, a language not only "essential to a gentleman's education" but, said Stiles, even more essential in heaven.

From the very beginnings in New England, its settlers saw themselves as the children of Israel, God's Chosen People. They named their own children Isaac and Ishmael, Rachel and Rebecca, Abigail, Amos, and Aaron. Obsession with the Jews was such that it even led to speculation that the Indians of America might be descended from Israel's Lost Tribes. The practice of circumcision among the Indians supported the hypothesis, but one Hamon L'Estrange offered an irrefutable syllogism—Jews are not permitted to marry whores, all Indian women are whores, thus the Indians could not be Jews!

For more than a century, the analogy between British tyranny over the colonists in America and Egypt's over the Jewscontinued. The persecution by the Church of England of the various nonconformist Puritan sects had caused the flight to America—comparable to the flight from Egypt. A century later, the analogy was still a constant—the rhetoric of the Revolution compared George III with the wicked Pharaoh. Franklin, Jefferson, and Adams recommended for the seal of the United States a design of the children of Israel escaping from Pharaoh's hosts whom God is about to drown in the Red Sea while Moses stands on the far shore. Inscribed on the Liberty Bell was the injunction from Leviticus: "Proclaim liberty throughout the land unto all the inhabitants thereof."

But the influence of the Hebrew Bible and affection for the People of the Book "was generally operative in inverse proportion to the presence of flesh and blood Jews." In 1649, when a Jew named Solomon Franco proposed to settle in Boston, he was paid to leave. In Connecticut there were no votes for Jews or such other natural "inferiors" as Roman Catholics, blacks, Indians, or women. Only white Anglo-Saxon males rich enough to own property and wise or devout enough to pay dues to the Congregational Church had the right to vote.

Although Roger Williams founded Rhode Island as a refuge from religious discrimination, the same disenfranchisement common throughout New England existed in Providence until 1843. But the right to vote was not invariably coexistent with the ability to make money, and a few colonial Jewish merchant families—Rivera, Lopez, Levy, Seixas, and Hart, for example—made considerable fortunes in whale oil, spermaceti candles, rum, and slaves. Most of the few Jewish families that became rich enough to have portraits painted by Gilbert Stuart and to help finance the Revolution were assimilated into the local aristocracy and ceased to be Jews.

Much more typical of the few Jews in New England were the peddlers, from "David the Jew," who was arrested for peddling in Hartford in 1659, to his hundreds of nameless nineteenth-and early twentieth-century counterparts who trudged to Maine and even to Canada. Peddling was much harder in the North than in the South, not only because of the weather but because Southern planters were richer than hardscrabble Yankee farmers and there were fewer stores in the South.

In addition to country peddlers, there were city peddlers, and female as well as male peddlers. Boston's "Aunt Rachel" in the 1880s peddled in the Irish sections and so learned an English as accented by its Irish brogue as by her native Russian and Yiddish. Most New England peddlers barely eked out a living, but a few became rich. Gerson Fox (Gershon Fuchs) began peddling in Hartford about 1830, and in 1840 started a small store that is now the biggest in Connecticut.

Another was William Filene, who at eighteen came to America after the failed German Revolution of 1848. Filene knocked around New England, working as a peddler, a tailor, a glazier, until he met Clara Ballin in Hartford and fell in love. He then decided that he must save enough money to marry her, which he did within four years. By 1856, at twenty-five, he had enough to open a small store in Salem, Massachusetts.

Once the most prosperous port in North America when Boston was still insignificant, Salem was now dying—its harbor silting up, its young leaving, its businesses closing and moving away. But Filene's pattern would always be to buy what was down, especially at moments of panic when others despaired but he believed that hard work could accomplish a recovery.

Filene did so well in Salem that eight years later he could afford to send Clara, the children, and an Irish nursemaid on a trip to Germany. Near Poznan they visited William's mother and father, about to celebrate their golden wedding anniversary; then they went to Clara's parents near Frankfurt, who had been rich enough to send their daughter to New York to learn English and who had shipped her as trousseau thirteen cases of household furnishings when she married William.

While his family was in Germany, William bought a wholesale business in New York at a bargain price during one of the financial crises caused by the Civil War. Thereafter he traveled between Salem and New York, running both enterprises until the New York business grew so big and profitable that he could move his family to a luxurious house in New York at 92nd Street and Fifth Avenue between Central Park and a pasture. Years later his second son, Edward, recalled: "Coming from old contracting, close-packed Salem to New York was like moving to the country. I remember a blur of summer days, of the house being incredibly spacious and cool and rich."

But if financial panics could offer William Filene opportunities, they could also ruin him. In the panic that followed Jay Gould's infamous Black Friday in 1868, Filene was wiped out.

He was left almost penniless after the brief years of luxury in New York. Once again he started from scratch. This time it was a tiny dry-goods shop in Lynn, the dreary shoe-manufacturing town that sometimes served as the symbol of all such bleak New England mill towns. All his life Edward Filene would remember Lynn's depressing, windowless red-brick shoe factories, the acid stench from the tanneries, the silent, dazed men and women walking slowly down the center of narrow, muddy, cobblestone streets to his father's store that had to be kept open until midnight because these factory hands worked such late hours.

But the observant Edward also watched the town's factory owners, many of them ostentatious, nouveaux riches Civil War profiteers. During a particularly bitter strike at the shoe factories, one owner drove past his starving employees in a brand-new, extravagantly expensive carriage drawn by four matched horses and with a black footman to open the door. Edward saw blind hatred overwhelm the starving strikers, who suddenly began stoning the arrogant factory owner. As an adult, Filene repeatedly spoke of this episode, invariably snorting his ultimate expression of contempt: "Kindergarten! Waving a red flag at a bull—it's Kindergarten stuff."

Helping in his father's store, the boy observed the contrast between the rich women, who bought quickly and lavishly or refused to buy because the merchandise was "not fine enough," and the poor wives of the workingmen, who held a bolt of cheap goods for an intolerably long time, turning it over and over, wondering not about its quality so much as whether this pitiably tiny expenditure might later mean too little money for food or rent or medicine.

In Lynn, William Filene once again built a successful store; and from its profits he bought in the next few years four additional ones at bargain prices, a men's store in Lynn, a dry-goods store in Bath, Maine, and two stores in Boston's Winter Street, one for gloves, the other for laces. He wanted each of his four sons as well as the future husband of his daughter to have a business of his own, but only Edward and Lincoln would prove to be able businessmen.

As a child, Edward was chronically sickly. Once, after staying in bed for a whole year, he had to learn to walk all over again. The weak, crippled boy, unable to keep up with his brothers and their friends was, as he later wrote, constantly urged by his mother: "`Go play,' with a curious intonation on that word `play.' It came to mean bushes that pulled at your clothes and scratched your hands and face. I got the idea that playing was something you were forced to do, like going to bed early, because adults expected you to. I never hated any part of my work so much as I hated being made to play."

A burden or a joke to his contemporaries, Edward became a friendless loner who identified himself with Hans Christian Andersen's "Ugly Duckling." In Filene's revised version, the agent of his transformation into a swan was to be Harvard College. He kept books hidden in each of his father's stores to study when he had a moment of leisure. When he was carrying cash or merchandise from one store to another on the streetcar or the ferry, he brought along Bancroft's History or Darwin's Origin.

At twenty, in 1880, the painfully self-educated scholar passed his Harvard entrance examinations. But before college opened, William Filene had a stroke and Edward, as the ablest though not the oldest son, had to take over managing the stores. Fifty-eight years later, in a private file to which no one except Edward had access while he lived, his executors would find a painful keepsake cherished secretly for more than half a century. It was Certificate Number 276, certifying that he had passed his examinations and was eligible to enter Harvard.

Early every morning, Edward now went to Boston to oversee the two shops there. When they closed, earlier than the two in Lynn, he walked to Rowe's Wharf, took the ferry and the cars to Lynn, and worked in those two stores until they closed about midnight. His older brother, Rudolph, had already proven himself irresponsible, and a younger brother, Bert, was demonstrating his incompetence to run the store in Bath. Lincoln, the youngest of all, was only sixteen. Faced with the possibility that his father might never again actively run the stores, Edward determined to run them so well that ten years later, at thirty, he would have accumulated $100,000; $50,000 of this would protect his parents, even if the stores were lost; the other $50,000 would, he hoped, put him through Harvard and launch him on whatever career he might then choose.

When Edward had to go to New York to buy for the stores, he took the midnight train from Boston, got breakfast at the station, worked all day and as late into the night as necessary, then took the next train back to Boston. In this way he avoided both the cost of a hotel room and the company of other buyers who played cards, went to the theater, and partook of the city's many amusements.

Edward was bewildered by the terrifying variety of merchandise offered for sale in New York, and even more by the inexplicable and sudden shifts of fashion that destroyed the value of merchandise in stores. He promptly determined that he would somehow devise scientific methods of merchandising so as to decrease the terrible risks these presented to the retailer. This determination would continue throughout his life and would long cause him to be an object of scorn among merchants who were smugly certain that success in merchandising depended not upon science but upon such inexplicable mysteries as superior taste and a prescient nose.

The argument between "instinctive" and "scientific" merchandising increased in the great storekeeping families as second- and third-generation sons were sent off for training at the Harvard Business School and similar institutions that had been built in part by generous contributions from first-generation, unscientific merchants. As scions returned from the Wharton School, they were quick to display their new, more formal business methods and occasionally even an ill-disguised feeling of superiority vis-a-vis older family members. A classic family story is repeated in virtually every city across America—always told as though it were unique to that family. The founder grandfather (or father) passing by the store on Sunday sees an inventory in progress, with very complicated methods and forms devised by very costly accountants. "What's all this expensive mish-mash?" demands the Patriarch.

"It's an inventory," explains the New Generation.

"What's it for? Who needs it? All these people cost money and they're not selling anything!"

"But it's necessary," the New Generation explains patiently. "We must do this regularly or we can't know what our profit is.

Thereupon the Patriarch takes the New Generation by the sleeve and guides him to the Patriarch's office, where he unlocks a desk drawer that the New Generation has never seen unlocked before and so has always wondered what secret it contained. From the drawer the Patriarch takes out an old, worn, dirty canvas pack, and from the pack he removes and spreads on the desk a few dozen spools of thread, papers of pins, darning needles, and sets of buttons.

"This," says the Patriarch, pointing to the pack's pitiful contents, "is the inventory." And then, with a gesture that embraces all the floors of the enormous store and all the millions of dollars of merchandise the store contains, the Patriarch intones: "Everything else—that's the profit."

Young Edward Filene in only three years had all the stores doing very well. Then suddenly the eczema that had always plagued him returned. On October 12, 1883, he awakened to find his face, armpits, and groin red and inflamed. Soon the inflammation covered him entirely. He had long looked upon his body with distrust and never with more reason. Now every morning for an hour and a quarter his whole body had to be slathered with zinc salve and every evening for a like period with tar. Also prescribed was acid potash, to be taken internally.

Completely bedridden, Edward continued these treatments for two years, during which time his hair fell out, the pain increased constantly, and great patches of skin dropped from him, leaving raw, burning flesh.

Even under these conditions, he continued to observe and speculate: "I wonder if Socrates ever had a toothache, and how he bore it if he did. I would rather know that than know the account of how fearlessly he took the poison that was to kill him. I can easily imagine a state of feeling made so exalted by innocence and the presence of weeping and sympathetic friends as to take from death all its terror. But common toothache, or some disease disgusting but not dangerous—how did he meet that?" At last the agony became so terrible that he refused further medicine; thereafter, he gradually improved.

It was during this long illness that Edward's youngest brother, Lincoln, began to play an important role in building the family business. The two men could scarcely have been more unlike. Lincoln was as modest, friendly, even-tempered, ready to compromise, and free in giving praise and credit as Edward was prideful, prickly, stubborn, and often hypercritical. Lincoln abhorred fights—Edward reveled in them. Practical and loving, Lincoln would become a happy family man, who viewed his top business associates as extensions of his family. E. A., as he was always called in the store, remained a frequently irascible bachelor who—once he had become rich—saw the store and its employees as means of testing his torrent of ideas and theories, a few of which were brilliant to the point of genius. But had they all been put into effect, they would have bankrupted the store. This disparity would finally lead to one of the very few bitter and bloody palace revolutions in the great Jewish merchant families. However, between 1891, when E. A. and Lincoln took charge, and the end of World War I, it built one of the greatest stores in the world.

But not without competition. Boston had not waited for the Filenes to arrive. There were dozens of other stores, including Jordan Marsh, which was already well on its way to becoming the largest department store in New England.

In 1836 Eben Dyer Jordan, then fourteen, had arrived in Boston from Maine. He was descended from a once wealthy family, whose first settler in Maine in 1641 was a Church of England clergyman. But when Eben was four his father died, leaving the family so desperately poor that Eben's mother had to "farm out" the boy to neighbors to work for his keep.

The first time Eben as a child was sent into the village general store—for a dozen "soft crackers"—he witnessed a miracle no less crucial to his development than Paul's on the road to Damascus or Rousseau's on the way to Vincennes. He paid the pennies he had been given, received the crackers, and, hypnotized by this communion, he stayed and stared as again and again he witnessed money exchanged for goods. For him it was a sight that would never lose its thrill.

Eben's first retail job in Boston was as an errand boy. He opened the store before daylight, got the fires going in winter, swept out, and learned everything by doing everything. He was, even for that day, so industrious that he impressed one of the important Hanover Street dry-goods merchants, who set up the nineteen-year-old in his own little store.

Jordan was successful as his own boss. He developed $8,000 in sales the first year and almost $100,000 the fourth. But because he decided that he should also educate himself in wholesaling and importing, he did the unbelievable: at twenty-five he sold his successful store to go to work once again as an employee. He stayed two years at James M. Beebe & Company, a big importing and jobbing house, where Junius Spencer Morgan was a member of the firm.

Then, satisfied that he now knew enough, Jordan joined with his friend Benjamin L. Marsh. On January 20, 1851, with a capital of $5,000, they began what would become one of the half-dozen greatest department stores in America.

With the store's enormous success, Eben and his son, Eben, Jr., would become lavish supporters of music in Boston both at the New England Conservatory of Music and by giving the city its opera house. Eben, Jr., also would live in a rather grander style than the Back Bay Boston Brahmins considered suitable, leasing Inverary Castle in Argyllshire and subsequently Drummond Castle in Perthshire for his family's summer vacations.

When, in 1891, Edward and Lincoln Filene took over the management of their father's Boston store, it was not a department store like Jordan's. It was a specialty store. Jordan's sold everything—men's wear, women's wear, housewares, furniture—but Filene's sold only women's fashions and accessories. Like most other specialty stores, including Bergdorf Goodman and Neiman-Marcus, it would later add children's and men's wear but never become a full department store.

The Filene brothers not only concentrated on merchandising for women but also, remembering how much more difficult it was to sell to poor women than to rich ones, tried constantly to raise the quality of their stock and their service. While Edward devoted his time chiefly to merchandising, the more equable Lincoln was in charge of personnel and customer relations. If Edward was on occasion less able than Lincoln at dealing with employees individually, he was no less interested in them as a group.

In 1898, at the height of American laissez-faire capitalism, E. A. created the Filene Cooperative Association. The move was not made in response to any threatened strike or unrest among the store's five hundred employees; in fact, quite the opposite. E. A. had enthusiastically set up a variety of employee welfare projects—a medical service, an employees' dining room, an insurance fund—only to find that the employees, despite their obvious need, refused to take advantage of these. Never one to accept failure easily, he investigated and found that the employees distrusted these gifts. They feared that the medical service, for example, would reveal their secrets to management, with the result that anyone who was ill would be fired.

E. A. effected an immediate solution to this problem: he turned over each such enterprise to the employees to run themselves, as they chose, for their own benefit. With a candor not always evident in a boss's speeches to his employees, E. A. admitted at a meeting of the Association in 1904: "My brother and I had tried to do the work for our people under well-meant but still despotically benevolent principles. But grown wiser and more democratic by our failures, we agreed to do nothing for our people, but to try to help them to do everything for themselves."

The Association was self-governing. Its officers and executive committee were elected by secret ballot. E. A. was convinced that this kind of industrial democracy would assure not only the survival of free enterprise but also its optimum profitability. He preached his gospel to any and every business group that would listen and, like all evangelists, was easy to make fun of. But unlike many of them, he knew how to take the sting out of his critics' jibes. When someone said he was "a cross between a pack peddler and Isaiah," E. A. agreed.

But he kept preaching industrial democracy. He boasted that the Association "decides by vote all the rules of the store, hours of opening and closing, in fact everything, the question of wages and discharge." This was an exaggeration, but not a big one, for although the management had the right to veto decisions of the Association, it did not do so.

At a time when the salaries of ordinary department-store employees ranged between $5 and $12 a week, most could not, despite pious Victorian platitudes and preachments, put away anything for a rainy day, and when the inevitable rainy day arrived they could not get bank credit. This made them easy prey for the loan shark. A woman or man who needed $30 desperately would accept terms that led to paying interest of $1,080, to find the original $30 still owing.

Aware of this problem, E. A. discovered what he believed could be its solution; as with many of the ideas he supported, he found it while traveling. In 1907, he visited India, and learned about the Agricultural Cooperative Banks in Bengal. Fascinated, he then went on to Germany, where cooperative banks had been successful since the middle of the nineteenth century. A year later, with the help of a priest, Alphonse Desjardins, who had already established credit unions in Quebec, E. A. started a movement to make them legal in Massachusetts. He then founded and supported the Credit Union National Extension Bureau to propagandize for and help legalize credit unions throughout America against the resolute opposition in every state of bankers and loan sharks.

The formation of these unions was simple. In some states, as few as seven men from their pooled savings could subscribe shares of $5 or $10 par value. They and their fellow employees could then deposit further savings and borrow small sums.

This movement would grow into one of E. A.'s greatest successes. In one year in which 7,000 banks failed and 5,000 were kept from failing only by the intervention of the Reconstruction Finance Corporation (RFC), not a single credit union failed and only five borrowed from the RFC. The reasons for the contrast were edifying. Bank officers and directors borrowed lavishly from their own banks or from other banks on a mutual backscratching basis. The officers of credit unions, however, could not borrow from its funds, nor could they become endorsers for borrowers in excess of the value of their own shares. And credit union officers (who were unpaid) did not frequent the expensive restaurants or exclusive country clubs that seemed mandatory for well-paid bank officers. Therefore the operating expense of credit unions was minuscule.

In their attempts to defeat legislation legalizing these credit unions, the bankers had asked contemptuously: "Do you really believe that shopgirls and plumbers can go into banking?" The shopgirls and hundreds of thousands of others swiftly proved that they could, and the monument to Edward A. Filene on Boston Common was erected in 1959 as a tribute to his role as godfather to the credit union movement in America.

In a speech he made to the American Academy of Political and Social Science on April 7, 1907, "Conditions of Working Women," E. A. ended with a poem of his own entitled "How to Make a Poet."

First get a good piece of land.
Build a factory.
Govern it wisely,
That is, with knowledge plus sympathy.
Make it a business success.
Make the factory and the village beautiful.
Make conditions just;
And then more just;
And then more just;
And one of the sons of one of the workers
Will be a poet.

If not much as poetry, it nevertheless expresses the optimistic conviction of man's perfectibility that was then thought to be no less a certainty than the opposite view is today. The believer in progress, necessarily an optimist, is now widely thought to be a fool or a fraud in America, despite the fact that his eighteenth-century fathers, here and in Europe, believed that morals, politics, emotions, indeed all of life, could be scientifically and logically understood and codified and that, in Jeremy Bentham's phrase, "knowledge is rapidly advancing toward perfection."

If Filene's meliorism had an emphasis on matters material rather than moral, it was nonetheless descended from Franklin's, Jefferson's, and Paine's. It included the same nineteenth-century boosterism that proclaimed each person who came to town was one more customer, one more client, one more patient, one more taxpayer who could help to build the Athens of the South, the Paris of the West, the New Jerusalem. Such boosterism is easy to laugh at; but it built America's cities.

In cities and villages all across the country, Jewish merchants—Joseph Pfeifer in Little Rock, Adolph Schwartz in El Paso, David Lubin in Sacramento—possibly even more than their Gentile fellow Americans, were buoyed by a boundless optimism. They believed that finally, here, Isaiah's vision could become reality: "Every valley shall be exalted, and every mountain and hill shall be made low; and the crooked shall be made straight and the rough places plain."

As the eighteenth-century philosophes were certain that science would solve mankind's historic dilemmas, so Edward Filene believed that science could solve the storekeeper's. And the greatest of these was markdowns. One of the few certainties in retailing is that some of the merchandise bought enthusiastically in the wholesale market, where it looks eminently saleable, will, when it reaches the store, prove stubbornly unsaleable. But despite this inevitability, buyers, like the rest of humanity, are reluctant to admit and address their errors. They find endless excuses for the slow sale of such merchandise: the weather's still too hot; the weather's still too cold. Easter's late this year; Easter was early this year. It hasn't been advertised; the ad was lousy; the ad ran on the wrong day; the ad ran in the wrong newspaper.

The danger in these rationalizations is that they usually increase markdowns. A coat that does not sell early in the fall may still tempt customers if it is marked down early by as little as 25 percent. But as the season ends, it must be marked down far more drastically to tempt a customer who, having done without a new coat so long, may otherwise reasonably decide to wait until the next season.

To combat the buyer's tendency to postpone taking markdowns, E. A. in the early years of this century devised his automatic markdown system that has since made Filene's Automatic Bargain Basement the most famous store in New England—better known and far more often visited than Faneuil Hall or the Old State House. The system is, in E. A.'s phrase, "an auction in reverse"; it overcomes the buyer's reluctance to admit error by the simple device of entirely removing decision making from the markdown process.

After various evolutionary changes, the system is now absolutely automatic. The price tag of every article in the basement is marked with the date it is first put on sale. Twelve selling days later, if the article is unsold, the price is automatically reduced by 25 percent. After the next six selling days, Filene's first price (which itself was often less than half the article's original retail price) is reduced 50 percent; six selling days later, it is marked down 75 percent. And after another six—a total of thirty selling days—the article is given away to charity.

Over 90 percent of the merchandise disappears within the first twelve days and only one-tenth of 1 percent goes to charity. Because these markdown rules are as inflexible as the laws of the Medes and Persians, customers have learned that, unlike upstairs, it is useless to wait before buying an item until a favorite salesperson telephones announcing it has been marked down. Indeed, there are very few salespeople in what is essentially a self-service operation, and those few merely write the sales ticket and take the cash—there is no charging in the basement.

Although it was ten years before Filene's Automatic Bargain Basement became profitable, it eventually accounted for more than 25 percent of the store's sales and throughout the Depression its profits would more than offset the rest of the store's losses. The further profits resulting from customers who come to the basement and then make their way to the upper floors to buy more cannot be calculated.

E. A.'s automatic markdown system is at the heart of the basement operation; but of course what is bought is also important (although not always crucial, because when the mullets are feeding, they often snap up anything in their frenzy). Today, some sixty buyers scour the world for surplus stock, imperfect and damaged merchandise, going-out-of-business opportunities, and other "distress" bargain possibilities, in much the same spirit that inspired William Filene's search for business bargains in times of panic.

However ghoulish the role of these buyers, they are nevertheless welcomed by the victims of fire, flood, and failure, because they offer the great essential—immediate cash. At the beginning of World War II, just before Paris fell to the Germans, Filene's buyers shipped home through Spain some four hundred dresses from such couturiers as Lucien LeLong, Elsa Schiaparelli, Coco Chanel, and Maggie Rouf. Norman Hartnell, couturier to England's royal family, also had models sold in Filene's basement.

Because a business in millions of dollars, often attracting more than 100,000 customers a day, cannot rely upon such fortunate disasters as Neiman-Marcus's fires to supply its needs, Filene's basement has also worked out regular buying arrangements with such stores as Neiman's and Saks Fifth Avenue. When the unsold merchandise of these stores has been so greatly reduced that further markdowns and offering the merchandise so long after the season would be damaging to the store's prestige, it is packed up and sent to Filene's. Customers in those communities have learned that the ads announcing: "LAST FOUR DAYS before we ship away this sale merchandise forever," mean what they say.

For generations of New England shoppers (including Joseph Kennedy's children, Harvard presidents, and Back Bay Brahmins) as well as for visiting national and international stars of movies, television, and sports, shopping in Filene's basement has also provided a blood sport. Every morning at the opening gong at 9:30, there is a crushing stampede of customers who have been waiting at the entrances. They burst into the hot, smelly, narrow aisles, snatching from gas-pipe racks and intentionally shabby wooden counters as they run. Individual fights between customers, clawing, biting, and cursing over the same article are everyday affairs, and near-riots are not uncommon.

For those who enjoy spectator sports and for voyeurs as well, there is an endless show. Most women refuse the inevitable wait for the few fitting rooms, preferring to strip in the aisles to try on their treasures. And while the customer is pulling a new dress over her head, she risks losing not only the others she has torn from the racks and must put down for an instant but also her own.

The enormous success of this basement has of course inspired numerous imitations, all over America and abroad as well, for example at Selfridge's in London. But in more than half a century it has never been successfully duplicated anywhere.

The Automatic Bargain Basement was E. A.'s most successful attempt to make merchandising "scientific" and to accomplish what he had set as the primary mission of his life—to prove that lowered distribution costs would sell more customers and make greater profits than higher and higher prices. In the last decades of his life, he would characterize it as "doing for distribution what Henry Ford did for manufacturing," although he had started his efforts years before Ford's production line.

E. A. wrote half a dozen books (one was translated into five languages), on the subject of better and cheaper distribution, as well as articles for such popular periodicals as the Saturday Evening Post, Survey Graphic, Atlantic Monthly, and The New York Times. This scientific approach extended not only to manufacturers and professional store buyers but also to customers. He pleaded for professional and demanding, "hardboiled customers," who would take the time and trouble necessary to be certain they were getting the best prices and quality obtainable. "It is economic treason to shop carelessly," he said.

While E. A. was combing the world for ideas and addressing himself more and more to problems unrelated directly to the store, Lincoln Filene was managing a constantly growing and more profitable business and bringing in talented executives from the outside to help him.

The Filene brothers had made a rule against any nepotism in the store. This was in strong contrast to the practice of most Jewish storekeepers, and may not have been entirely unrelated to the fact that E. A. had no children and Lincoln only daughters. It of course encouraged young executives, who saw that there was no impediment to promotion on their own merit.

The most extraordinary of these executives brought into the store and the one who, except for the brothers themselves, was most responsible for its success was Louis Edward Kirstein—one of the great eccentrics of American retailing.

He had begun early by running away from home on his sixteenth birthday. A great hulking fellow, he not only played baseball well enough to earn his keep in the bush leagues as a player but was smart enough to manage various small ball clubs. Yet he never stayed anywhere very long, preferring to "hobo" around and see the country.

Of his picaresque adventures, the most extraordinary took place in St. Louis. Kirstein was convicted of peddling a bottled panacea whose chief ingredients were sand and muddy Mississippi water. He was sentenced to pay a $5 fine or spend five days in jail. Kirstein did not have $5, but he convinced the judge to give him a few hours to raise the money. First he ran to the local Reform rabbi, who curtly refused to lend him the required sum. He then returned to the whorehouse where he had been living and working as a janitor, and asked for a $5 advance from the madame, who earlier in her career had had an eye gouged out in a fight with another whore. She lent him the money.

For the rest of his life he frequently pointed out the contrast between the charity "of the man of God and that one-eyed whore. I am convinced that she saved my life, that if she had let me go to jail, I would have become a criminal. I always wanted to repay her kindness and years later spent a lot of money on private detectives trying to trace her. But I never found her again."

When Kirstein returned to his native Rochester, New York, where he bought and managed the baseball team, he was still too proud to ask for financial help from his family, who could easily have supplied it. He often said later that he learned what he knew about hard trading from trying to get the very highest possible price for selling his best players in order to raise enough money to pay the rest.

In 1894, at twenty-seven, he married an heiress, Rose Stein. She was the daughter of Nathan Stein, the founder of Stein-Bloch, one of the pioneer men's clothing manufacturers in America. Kirstein then went to work for Stein-Bloch, where it did not endear him to his brothers-in-law that he was smarter than they and a harder worker. In order to avoid family friction, he left and joined Filene's as a junior partner in 1911. He was soon in charge of all merchandising and publicity.

A taciturn-looking giant, who spoke alternately in growls and grunts, Kirstein cultivated a reputation for imperious ferocity but was worshipped by his buyers. At Filene's he finally became a manager with enough money. He no longer had to sell off his stars. Now he could go out and hire star buyers away from other stores, or even take the often more costly alternative of training his own stars. He surrounded himself with women and men who enjoyed winning and hated losing as desperately as he did—"winning" consisted of regularly outperforming anyone else in Boston, whether at Jordan's, Stearn's, Gilchrist's, or White's. And when that became habitual, he and his team were only satisfied if they could outperform the other great specialty stores throughout the country.

Kirstein had a gift for aphorism and was widely quoted by other storekeepers:

"Advertising pays, when it is believed."

"The expense rate cannot be lowered by worrying about it."

"Retailing needs less figuring, more fingering."

"One thing wrong with business is that businessmen do not attend to it."

This last dictum was almost certainly inspired by the conduct of E. A. Filene. It was probably inevitable that so powerful and acerbic a figure as Kirstein would eventually fall out with E. A., but what insured it was E. A.'s reappearances in the store after months of traveling, whereupon he expected to reassume his role of undisputed chief.

Had this been the only problem, Lincoln Filene, whose skills as a peacemaker were legendary, could perhaps have handled the situation. But there was a more basic and irreconcilable problem. By the second decade of the century E. A. was a millionaire, who now wished to use the store as a vehicle for his social experiments, and even to give it away to all the employees. Kirstein and three other of the top executives wished to become millionaires themselves and were outraged at E. A.'s "damnfool Socialist experiments." They wanted to run a profitable business enterprise; E. A. wanted a laboratory to test his flood of ideas.

In Lincoln's house at Weston, a collection of which he was enormously proud was displayed on a wall. It was made up of gavels given to him after countless conventions, meetings, arbitrations, and conferences at which he had presided and kept the peace with skillful sweetness. In 1916, at a meeting he had arranged at the Aldine Club in New York, he proved that he could combine both E. A.'s yearning for a more scientific approach to storekeeping and Kirstein's itch to excel at the game. Lincoln had invited representatives of eighteen other successful American stores, including Detroit's J. L. Hudson Company, the Dayton Company of Minneapolis, San Francisco's Emporium, Pittsburgh's Joseph Horne Company, and Columbus's F. & R. Lazarus & Company, to the meeting.

He suggested to the assembled group that a scientific study of common merchandising problems might lead to reduced expenses and higher profits. To undertake such a study, he said, would require that they form a Retail Research Association, to which they would submit—honestly and fully—detailed figures from their own stores. This exchange of figures was, of course, a revolutionary suggestion. One of the traditional imperatives of business was secrecy. You didn't tell your wife more than you had to; you didn't even tell your oldest boy everything until the very end or close to it. If the glove buyer for Horne's had access to the figures for Filene's glove department, she could see in what respects Filene's was doing better than she, and vice versa. If she then was hired away from Horne's to work at Jordan Marsh, wouldn't that be a disaster? And wouldn't it be an even greater disaster when buyers knew their profit figures and how well they were doing in relation to other stores and therefore demanded appropriate raises? Still worse, when salaried executives higher up in the store knew everything, wouldn't they go into business for themselves?

Despite many doubts, the Retail Research Association was started in 1918, but overcoming the traditional insistence on secrecy and fear of candor was only the first problem. Another was to make the sets of figures genuinely comparable, for the systems and records in each store were as individual as the original store owners.

Bernard Foreman, a Russian-born ladies' tailor who had built a fine ladies' specialty store in Rochester, was as innocent of the concept of depreciation as of English syntax. When a bookkeeper from the Retail Research Association relentlessly insisted that Foreman must charge the depreciation of his store building against profits if his figures were to be comparable, the horrified man made a special trip to Boston. He went to see Kirstein, whose wife had set Foreman up in business. Weeping uncontrollably, he sobbed: "Vunce already, Lou, I paid for the building and now your meshuggener bookkeeper says again a second time I gotta pay for it. For your Rosa I would do anything, but that never!"

Despite all the fears and birth pangs, however, the Association was so successful that two years later the stores started a second organization, the Associated Merchandising Corporation (AMC), whose chief purpose was cooperative buying for member stores (in the face of the increasing buying power of Sears, Roebuck). As it too flourished, the AMC took on additional cooperative chores, including recruiting executives, improving advertising, and exchanging personnel policies. Despite any laws to the contrary, there was of course an unwritten agreement that member stores did not steal employees whose abilities were revealed in the figure exchanges and at AMC meetings.

In 1920, Kirstein opened cooperative AMC buying offices in Europe. Other stores that used the buying offices included Bullock's of Los Angeles, Philadelphia's Strawbridge & Clothier, Baltimore's Hutzler Brothers Company, and Dallas's A. Harris & Company. From these same cooperative first steps would evolve the great American department-store chain, Federated Department Stores.

As E. A. and Lincoln had over the years given and sold 12 percent of the shares of their store to each of four top executives, the brothers had, with their remaining 52 percent, kept control—provided that they voted together. And despite differences of opinion, they had always done so. But finally E. A. had grown too removed from everyday storekeeping and too concerned with reform.

It was the era of the great reformers, both the muckrakers who believed America's promise had been corrupted but could yet be saved, and also the more revolutionary anarchists and Communists. Perhaps nowhere in America was the need for reform more evident than in Boston. Long ago the city had been a hotbed of revolution: James Otis, like Sam Adams, was a constant troublemaker, an agitator who, sometimes secretly, sometimes openly, whipped up public fury to violence over injustice and discrimination. But now radicals such as Sacco and Vanzetti could not even expect due process, and, instead of the Boston Tea Party, the 1919 suppression of the Boston police strike symbolized the city.

In point of fact, the love of liberty, free speech, and justice was not invariably the chief concern of New England's citizens. In 1692, two hundred years after Columbus's discovery of America, the anniversary had been marked in Salem by the burning of twenty witches.

E. A. was scarcely a Tom Paine or a John Brown, but his style of reform was better suited to the fat-cat mood of Boston than theirs would now have been.

E. A. was well aware that all Boston's important elements would have to join forces and act together if there was to be any hope of correcting the city's ills. To overcome the class, racial, and religious divisions that prevented such united action, he chose a means that at first glance seemed precisely the worst possible—another men's club.

Boston was perhaps the clubbiest city in America, yet the Catholics, the Jews, the Irish, the Italians—indeed everyone except the Brahmins—were rigorously excluded from the most important and powerful clubs. E. A. decided that there must be a City Club, where all the diverse Bostonians could meet and eat and come to know one another. He found and hired an able organizer who met individually with the most powerful member of each existing club to explain the purpose of the proposed new club: to discuss, to listen, to try to determine the common good for Boston, but never to go into politics.

Knowing that in addition to a convenient location, the sine qua non of a successful club was good, cheap food, E. A. himself undertook to find a chef. A constant traveler, wherever he ate a good meal he asked to meet the chef, and finally hired one. His City Club became one of Boston's most successful, but instead of developing into the forum for progressive ideas and the force for reform he had hoped it would, it soon became as conservative as the city's other institutions and a force for protecting the status quo.

E. A.'s lawyer and adviser, Louis D. Brandeis, declared: "Filene is forever making weapons for the enemy." Other examples of this ironic truth abound. In addition to the Boston City Club, E. A. organized Boston's Chamber of Commerce, then a national Chamber of Commerce, and finally an international Chamber of Commerce. Each of these he conceived as a force to make business more humane, progressive, and democratic; each, instead, became a powerful force for reaction and repression.

E. A., like many thoughtful Americans, had been enormously impressed by the exposures in Lincoln Steffens's The Shame of the Cities of the corruption and waste in big-city governments. Through the medium of the Good Government Association, which he had also organized, E. A. hired Steffens for $10,000 a year "to muckrake Boston," not only to investigate and expose but also to suggest cures for the city's ills.

In October 1903, Steffens brought an entourage that included his mother-in-law, servants, dog, cat, bird, and some seventeen trunks to a house on Beacon Hill. There he began "the biggest piece of work I ever attempted," work he hoped might lead to "the establishment by me of a profession, a new calling; that of a city manager or municipal architect." Just as the application of scientific methods to solving storekeeping problems had excited E. A., even more did this same approach to curing the problems of the city. But Steffens finally had to admit failure in his role as municipal physician. "New England," he diagnosed, "is dying of hypocrisy."

Slowly Steffens was approaching the view that attempts at reform are useless, a view best expressed by H. L. Mencken's dictum: "It will never get well if you pick it."

On his yacht at Marblehead, E. A. discussed at length with Steffens his two great ambitions: to increase the world standard of living by lowering distribution costs, and to promote industrial democracy and so save the free enterprise system. No less a political analyst than Lenin himself took note of E. A.'s efforts to correct the faults of capitalism and the possibility that they might postpone or prevent the world revolution Karl Marx had declared was inevitable. "So, Mr. Filene!" Lenin wrote, "you think that all the workers of all the world are fools!"

But even the ebullient E. A. had begun to have a few doubts about the effectiveness of democracy. In the speeches that he was delighted to give anywhere and anytime at the merest drop of an invitation, his most repeated story now was about the village priest whose poor congregation was determined to honor him. In an effort to combine their pitifully meager resources into one adequate gift, the members of the flock had decided that each of them would pour one bottle of wine into a cask and so give him one important gift. In the dead of night, each man brought a bottle to the priest's house and emptied it into the barrel that had been secretly brought to his front yard. The next morning when the priest tapped the cask, out flowed pure water—each man had expected that his failure to do his duty would be hidden by the honesty of his neighbors.

E. A. confessed to Steffens aboard the yacht that the store's employees misused the democratic tools he had given them. They were concerned with what he considered relatively minor matters—shorter hours, longer holidays—instead of with taking over the company itself and making it more profitable for themselves as owners. Would Steffens, E. A. asked, come to the store and lecture them? Steffens came.

"I told them," he later wrote in his Autobiography, "how ... the people had votes with power to govern, but did not exercise their rights; they let their bosses rule them scandalously. My hearers laughed at the people of New York, Philadelphia, Missouri, etc.... But when I paused and took up them and their store, there was silence. Pointing at Mr. Filene, I said that he said that they, his employees, were as weak and as ridiculous as the citizens of any city . . . that he had given them power to take over the company and that they used it only for trivialities, not always in the interest of the business.... I asked Filene to withdraw a moment and then asked that hunk of `the people' to say something. Not a word."

Lincoln Filene, Lou Kirstein, and the other stockholding executives were not so silent; nor were they anxious to give the store to the employees. In fact, their desire to form a holding company with Abraham & Straus and F. & R. Lazarus was inspired by E. A.'s talk of giving the store to its employees as well as by the advantage of a geographic spread of risk. When E. A. refused to go along, and instead fought the merger, Lincoln betrayed him. After so many years of joint control, based upon their always voting together, Lincoln voted with the store's other stockholding executives against his brother.

Just as E. A. had lost control of the City Club and the other reform vehicles he had created, so now in 1928 he lost control of his own store. But perhaps a defeated opponent was never more generously treated. He kept the title of president of the store; he was paid a salary of $100,000 a year—the same as his brother and Kirstein. Outside of the store, and especially in Europe, he was still considered the great merchant prince. But he was totally and permanently stripped of authority within the institution that he had built into the greatest specialty store in the world.

For E. A. it was a mixed curse, because now he was free to concentrate entirely on his nonretailing interests, and they were extraordinarily diverse. Like his father, E. A. was a tinkerer and inventor. With Captain Gordon Finlay, E. A. had designed the first simultaneous translating system for his International Chamber of Commerce. This Filene-Finlay system was subsequently produced by IBM for the Nuremberg war-crimes trials and the United Nations.

Long a liberal Democrat, E. A. could now devote more time to politics, serving as the Massachusetts administrator for the New Deal's National Recovery Administration and campaigning for Franklin D. Roosevelt. Prominent businessmen who supported FDR were in acutely short supply, so that Democratic National Chairman James A. Farley used E. A. nationally in an effort to disprove the charge that Roosevelt was the Public Enemy Number One of American business.

At 12 Otis Place, in his Back Bay brownstone overlooking the Charles River Basin, E. A. lived quite modestly for a millionaire. His only extravagance—other than his yacht—was that he surrounded himself with a staff of secretaries, speech writers, ghost writers, and biographers. Filene had paid Charles Wood to write his biography and then suppressed it. On Steffens's recommendation he had then hired Robert Cantwell to write another, only to fire him before he was fairly started. Although politically a liberal, especially in comparison to most millionaires, E. A. was not sensitive to problems of free speech. When asked about the domination of newspapers by advertisers in a 1911 interview by Hutchins Hapgood for Colliers, E. A. admitted candidly, "there has been a tacit agreement that we would be displeased if the newspaper published, for instance, news of an accident in the store."

As his role in the store ceased entirely, E. A.'s need to feel effective as a reformer increased. Egotism played a significant role in his activities and the loss of power increased his vanity—he removed his date of birth from his biography in the 1928 Who's Who.

Perhaps no love is fiercer than that of a writer for his own words. Filene was never happier than when his clipping services revealed that one of his speeches was reported on at length or one of his aphorisms on business was widely quoted. Although not a felicitous writer, he was an excellent reporter because he was relentlessly curious and questioned almost everyone, railroad brakemen, salesgirls, barbers, waitresses, making careful notes of what they said about their jobs, their homes, their politics, their lives.

Edward Filene's defeat at the store increased his always terrible longing for kudos. But his efforts for publicity and public recognition were, he insisted, only to prove that a capitalist could be useful and socially concerned. Beginning in 1929, he briefly paid $15,000 a year for the services of the publicist Edward Bernays, who says: "The Filenes' real family name was Katz. They were Polish Jews or at least hinter Berlin, which amounts to the same thing. The father thought `filene' meant `cat' in French and was classier than Katz. That's what E. A. told us when we were working for him."


By Octavia E. Butler

Four Walls Eight Windows

Copyright © 1995 Octavia E. Butler. All rights reserved.

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