A common feature of the expanding city in late nineteenth-century America was developing a downtown central business area. These downtown sections usually contained retail and wholesale establishments, office buildings, banks, and financial houses. Invariably by the 1880s, they also contained a retailing innovation called the department store.
The department store differed from other retail institutions in several ways. It was located in a central urban shopping center; it catered primarily to women; it carried a wide variety of merchandise under one roof. It depended upon a large volume of business. John Wanamaker, Philadelphia mercantile king, noted that the department store was a "natural product," made possible by "cheaper capital, better transportation, [and] more rapid communications." Indeed, the development of the department store would have been impossible without the technological innovations that stimulated the growth of large cities in the second half of the nineteenth century. Most important were transportation improvements: the successive urban adoption of the omnibus, the horsecar, the cablecar, and finally, the electric street railway. Construction developments such as the iron and steel frame made it possible to build large open stores conducive to the favorable display of merchandise. Central heating plants made the buildings comfortable in winter. And mechanical elevators enabled customers to move easily from floor to floor for the various kinds of merchandise. The rise of the daily mass-circulation newspaper also played a key role in department store growth, for the big stores were among the first to use wide-scale advertising to attract customers.
Although thousands of shoppers hailed the convenience of purchasing various goods under one roof, there was widespread opposition to the department store. It came primarily from three groups: small and middle-sized retail merchants located outside the central business districts, real estate men with holdings in the outlying areas, and some labor unions that objected to department store labor policies. These critics of the big stores charged them with fraudulent advertising, monopolistic practices, driving the small man out of business, and pauperizing labor. In-state after state, organizations of retail merchants pressured legislatures and city councils to enact punitive legislation against their competitors.
|The Carson, Pirie, Scott & Co., Wholesale Dry Goods building covered an entire city block, bounded by Monroe, Market, Adams streets, and the Chicago River. The main entrance was on Adams Street.|
The movement against the department store was particularly intensive in Chicago, where several department stores had appeared during the 1880s and 1890s. Like Marshall Field and Company, Carson, Pirie, Scott, and Company, the Mandel Brothers expanded stores formerly specializing in dry goods. For instance, Carson, Pirie, Scott had originally featured imported dress goods and linens but expanded to begin selling shoes in 1881; Marshall Field introduced furniture in 1896. Mandel Brothers opened an art department in 1883. Huge variety stores, such as The Fair Department Store and Seigel, Cooper and Company, which sold goods ranging from children's toys and kitchen equipment to fancy groceries and baby carriages, also began to appear in the downtown district in the 1890s.
As streetcar lines spread throughout the city, these downtown stores expanded their operations and volume of business. Correspondingly, there was a decline in retail business in other city sections, especially on Clark Street, Madison Street, Milwaukee Avenue, Blue Island Avenue, and Cottage Grove Avenue north of Thirty-ninth Street. From 1877 to 1896, land values in these areas decreased steadily while those in the central business area rose 700%.
In the Panic of 1893 (financial depression), the outlying retail businesses were hurt even further by department store competition. More than half the state's depression business failures were mercantile and commercial enterprises. The number doubled from 1892 to 1893. The peak year was 1896 when 817 Illinois trading and commercial firms went into bankruptcy (fewer failures among manufacturing concerns). The large Chicago department stores, however, continued to prosper. Significantly, many new urban transportation lines were built between 1894 and 1898, a development that undoubtedly bore a relationship to the growth of the department store business.
NOTE: The "Loop" is the 1.79-mile long circuit of elevated rail that forms the hub of the Chicago transit 'L' system. The Loop opened for passenger service on October 3, 1897. ("EL" refers to New York City's elevated transit system.)
Sorely affected by depression and resenting continued department store prosperity, retail merchants and their association were bitter about the big stores held responsible for the high failure rate among small retail businesses. "Department stores are slowly but steadily driving us out of business," complained one hardware dealer. "Making all allowances for trade depression, there is still a big scarcity of customers that we can trace directly to the department stores. Other complaints related to the advertising practices of department stores. Testifying before the Illinois Industrial Commission in 1900, S.W. Roth, secretary of the Cook County Retail Dealers' Association, blamed the decline in retail trade on "fraudulent advertising" by department stores. D.R. Goudie, the proprietor of a Chicago confectionary-cigar store, called department stores the "worst trusts" and noted that their "bargain" advertising has a serious "indirect effect" on small retail businessmen by making customers believe that the owner was making an inflated profit.
To obtain relief from the ruinous competition of the department store, merchants throughout the city began forming associations to push for punitive and regulatory legislation. In February of 1897, forty organizations formed the Cook County Businessmen's Association. C.F. Gillman, head of the West Side business group, was elected president.
The Chicago Federation of Labor agreed to work with the association because of the anti-union stance of the department stores and their employment of child labor. Several real estate men, including Marvin Farr, president of the Chicago Real Estate Board, also participated.
From the beginning, the organized agitation against department stores was political; the retail business organizations sought protection for themselves through punitive legislation against their large competitors. The chief proponent of such legislation was Congressman William Lorimer, Cook County Republican boss. Some of the loudest complaints about unfair department store competition came from the West Side, Lorimer's main bailiwick. It was significant that a machine politician, rather than a municipal reform organization, adopted the issue. The reform-oriented Civic Federation talked about appointing a committee to investigate the problem but never acted. Lorimer's willingness to become involved in the matter reflects the local and particularistic base of the urban political machine, which rested upon ward and precinct institutions. Small retail merchants often ran for municipal office under machine auspices, while many others benefited from connections with the ward organization.
Municipal reformers had a very different orientation and were concerned with eliminating the local and particularistic forces that supported the machine. They wanted to reorganize urban life, using as their model the rationalized and systematized business corporation with a vertical administrative decision-making structure. With its great variety of goods, the department store's ability to draw people from throughout the city and its efficient workforce and departments was undoubtedly attractive to the reformers and corresponded to their ideal for the city. It should not be surprising that among those active in the Municipal Voters' League, Chicago's chief reform organization at the turn of the century, were Henry G. Selfridge, second in line at Marshall Field and Company, and John V. Farwell, Jr., one of the city's leading dry goods merchants. It is also significant that the Municipal Voters' League consistently endorsed representatives of large businesses, rather than small ones, for seats on the city council.
In February 1897, legislation providing department stores' regulation was introduced in the Illinois General Assembly. The legislation called for the classification of trade and commerce into seventy-five categories and the licensing of any establishment that sold goods from more than one category. Delegates to the Republican city convention endorsed the legislation. They passed a resolution that decried "the destruction of the profits of the small shopkeepers by the competition of the department stores, which, by the use of labor grossly underpaid, have succeeded in largely driving out of business the many smaller shopkeepers throughout the city." "We believe," continued the resolution, "that the theory of the Republican party in favor of protection goes to the extent that the local business of every neighborhood... should be transacted in that neighborhood, and we favor... the wiping out of the present system of big department stores." Department store owners fought back, defending their policies in full-page advertisements in the Sunday newspapers. The Fair Department Store stated, for instance, "There is no secret about the success of this business—Chicago consumers have simply bought where they could save the most money—the more we sell, the cheaper we sell." A. M. Rothschild and Company maintained that "no one has a right to object to our underselling if you, the consumer, do not. No bright woman is going to pay double at other stores for articles she can get here for half." The spokesman for Carson, Pirie, Scott, and Company said that while his firm did not approve of the department store bill in general, it welcomed the clause calling for honest advertising. Every shopper had a right to expect this.
Despite opposition from the department stores, the Illinois Senate passed the anti-department store bill on March 24 by 39 to 4. Hundreds of small businessmen were on hand for the occasion. Lorimer's lieutenant Thomas N. "Doc" Jamieson pushed for the passage of a similar measure in the lower house. Realizing the popular appeal of the issue, both Chicago mayoralty candidates, Republican Nathaniel C. Sears and Democrat Carter H. Harrison sent telegrams to assemblymen asking their support of the legislation.
However, during the next two months, legislative interest in the anti-department store issue declined markedly as politicians and the press became involved in the struggle over controversial traction bills. Downstate opposition to the department store bills also began to develop. Although Cook County Assemblymen from both parties supported the measure, downstate members were suspicious of any legislation emanating from Chicago. As the Chicago Dry Goods Reporter noted, "In no other city of Illinois does the department store exist as it is in Chicago, and nowhere else does the small merchant so severely feel its competition. Until this evil... becomes more widespread, it is not probable that many State legislatures will take it into serious consideration."
Public opposition to the bill also appeared. "The great consuming public has no quarrel with an institution which it believes to have been instrumental in reducing the cost of living," commented the Dry Goods Reporter. Furthermore, the charges made against the department stores concerning mistreatment of labor, fraudulent advertising, and false pricing were also applicable to the smaller retail specialty shops. And, finally, rural legislators realized that, in many ways, the department store was merely a larger version of the country general store. Legislation that hit at one because of its variety of goods might conceivably be used against the other unless mere size is made the determining point for condemnation, a point of doubtful constitutionality.
On April 8, 1897, the anti-department store bill failed in the house by a vote of 63 to 77, with the bulk of nays coming from downstate representatives. State legislatures in Minnesota and New York defeated similar measures that spring. In Chicago, the leader of the Businessmen's Association blamed the defeat of the bill on bribery. A more pertinent reason was given by one department store owner: "It is no crime to sell dry goods and shoes under one roof, and the department stores stand vindicated." People would go where they found the "better values for their money."
An English newspaper reporter observed that legislation like the Illinois anti-department store bill reflected "the widespread tendency of the American people to appeal to the legislatures the economic changes of the times." In their adverse effects of economic alterations, small businessmen turned naturally to the local political machine instead of organizations, for the machine rather than the economic and social institutions of the community. In this case, however, the forces of localism were unable to block the centralizing tendencies at work in the modern American city. Downtown central business areas and department stores continued to grow, or at least to hold their own, until after World War II, when suburban residential dispersal, spurred by the automobile, was accompanied by suburban economic and commercial dispersal. Thus, the forces responsible for the downtown store's decline were demographic and technological, the same kinds of forces that had originally caused the department store to grow.
© Joel A. Tarr
Edited by Dr. Neil Gale, Ph.D.