When chain stores were new, the reaction against them was fierce. Chain stores were accused of destroying democracy, of limiting freedom, of corrupting young people, and of being evil, evil, evil. But in reality, chain stores were innovating the way we shop — and replacing a very bad kind of local business. Even if you love shopping local, this episode might just change the way you think about business.
Jason Feifer: This is Pessimists Archive. I'm Jason Feifer. The year, 1998. The city, New York. A man named Joe Fox comes to town to set up a location of Fox Books, a mega bookstore chain that dominates the booming book industry. This freaks out a woman named Kathleen Kelly, who runs a cute independent bookshop around the corner called, literally. The Shop Around the Corner. But then, the craziest thing happens. Joe Fox and Kathleen Kelly log on to AOL, get chatting anonymously and fall in love without realizing that they're business rivals in real life. And maybe you're wondering, "Is this the plot of that Tom Hanks and Meg Ryan movie, You've Got Mail?" Yes. Yes, it is. A movie from an era when bookstores were big business, and you actually had to be told you had email.
Could you imagine that today, by the way? The literal definition of hell would be to live in 2019, but have that guy following us around like, "You've got mail." I know, but I'm just... "You've got mail." Yeah, but let me just get.... "You got mail." When does this gag stop being funny? "You've got mail." Oh, yeah? Well, you've got a sharp decline in relevancy, so how about that?
Anyway, I bring up You've Got Mail, not because of the antiquated technology, but because of something that happens in the movie that remains exceptionally current today. It's the relationship between Joe Fox's mega chain store and the little indie store. There's the scene when Joe and his branch manager are opening the shop, and they're talking about the reaction they're going to get from the crowd.
Voice Clip (You've Got Mail): As soon as they hear, they're going to be lining up...
Voice Clip (You've Got Mail): ... to get the big, bad chain store...
Voice Clip (You've Got Mail): ... that's out to destroy...
Voice Clip (You've Got Mail): ... everything they hold dear. That's right. They're going to hate us at the beginning, but we'll get them in the end.
Jason Feifer: And they're right. That's been our relationship with chain stores for decades. We may complain about them and blame them for killing off small businesses, but we also use them and rely upon them and sometimes even love them. I You've Got Mail, the little bookstore closes, the big bookstore survives, and nobody seems to bothered.
But it wasn't always this way. When chain stores first developed as a concept in the late 1800s and into the early 1900s, they were resisted in very different, very angry ways. For example, here's Louisiana governor, Huey Long:
Governor Huey L...: I would rather have thieves and gangsters than chain stores in Louisiana.
Jason Feifer: And here's Texas Congressman, Wright Patman, in reference to chain stores:
Wright Patman: Let's keep Hitler's methods of government and business in Europe.
Jason Feifer: That's right. The resistance to chain stores was so emotional that Hitler got dragged into it. People claimed that chain stores led to juvenile delinquency, and there were even anti-chain store songs. Here's something called Hello World Dog Gone from 1930 and produced by a radio station in Shreveport, Louisiana, which was home to a notoriously anti-chain store talk show host:
Voice Clip (Hello World Dog Gone): (singing)
Jason Feifer: If you didn't catch that.... I know the audio is kind of scratchy... he's talking about how the chain stores daily rob you and pay no taxes in your town, and their big trucks roll all around you. In 1936, a publication called the National Association of Retail Druggists Journal called chain stores "a dictatorship of big money, a state of financial feudalism, and state and federal governments got heavily involved. Between 1931 and 1939, 27 of the 48 states passed laws that were aimed at stopping the spread of chain stores. Clearly, something very different was happening back then. This wasn't just a question of character or the community or the survival of the shop around the corner, as we sometimes talk about now. It was, it seemed back then, a struggle for the soul of America.
But why? Why were chain stores seen as so evil, and how can the chain store panic of back then inform how we think of them today? That's what we're going to investigate on this episode of Pessimists Archive, and the answer, I have to admit, really challenged my own feelings about chain stores. So let's step back to where it all began.
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All right. We're back. And before we get into the history of chain stores, I want to say outright, I'm a guy whose sympathies instinctually lie with the small company. I will always drink a local craft beer over some mass market thing. I prefer to eat at local restaurants. I'll spend the extra few bucks to buy, I don't know, some yogurt that looks like it came from a small farm. I mean, I am not, by nature, a champion of big, but I'd also never really spent time thinking about where big business came from.
Rob Atkinson: Really, a lot of this is dictated by technology.
Jason Feifer: This is Rob.
Rob Atkinson: I'm Rob Atkinson I'm president of the Information Technology and Innovation Foundation.
Jason Feifer: And I should note, he's a guy who thinks quite differently about big business.
Rob Atkinson: I'm the author of a new book, Big Is Beautiful: Debunking the Myth of Small Business.
Jason Feifer: Although, to be fair, Rob told me he does also prefer a local craft beer. So, anyway, before the Civil War, America was a mostly agrarian land. Chain stores were just an impossibility. It hadn't even occurred to anyone.
Rob Atkinson: And one of the big reasons was you couldn't move things very cheaply. You might be able to move some furniture 50 miles or 100 miles, but you didn't have a national market.
Jason Feifer: If a company was lucky, it could distribute its wares in 150 mile radius using local railroads, but mostly everyone just kept close to home. Small consumer base, small scale, that was it. But then after the Civil War, America began to build a nationwide railroad system and developed cheap steel and electric motors, and now you actually could move things around more cheaply. A local manufacturer suddenly had access to large portions of America and the ability to produce a lot more in a lot less time, and this had ripple effects across every part of life.
Rob Atkinson: We look at what's happening now in the U.S. and we're like, "Oh, my gosh. We've got internet and cell phones," and "Isn't this dramatic or changing fast?" That is nothing compared to what was going on between, say, 1880 and 1920. I mean, it was just a fundamental change in who America was.
Jason Feifer: Suddenly, there was a race to scale and a lot of resentment from people whose lives changed as a result. I mean, a company, for example, could now cobble together 500 acres and use a tractor to produce a mass amount of food, and then sell it more cheaply to a wider set of customers, which, of course, totally destroyed the small farmer, who just tended to his small tract of land. And a manufacturer could grow from a small local outfit to a giant factory that employs 500 people and works them 60 hours a week. These changes lead to political backlash, labor unions, populist movements. But from a consumer perspective, all of this was amazing.
Rob Atkinson: The consumer side of the world started to see all the benefits. Hey, I can get a car now. Hey, I have electricity. Hey, I can afford more than a couple of dinky rattling chairs.
Jason Feifer: Hey, That's a pretty good, new slogan for America, I think. America: Now more than just a couple of dinky, rattling chairs. So we've now laid the foundation upon which chain stores are going to be built. Here it is: An interconnected America; manufacturers able to reach millions of people; and importantly, the country has been introduced to the concept of an economy of scale... that if you're big, you can find efficiencies in manufacturing and distribution and therefore, cut the cost of the final product.
Now, there's one other big change that you need to understand before we get into the rise of chain stores, and that is this. As food manufacturers were able to scale up production, they were also using new packaging equipment that could put their food into individually sized bags and boxes, and this is new. We forget that the basic conveniences of our modern lives didn't always exist, but going to a store and taking home a jar of pickles is a relatively new thing. Before all these changes and before chain stores came along, here is how a person would shop.
Rob Atkinson: If you wanted to get five cups of sugar or whatever [inaudible], there was a big bin of sugar. There wasn't a package of sugar on a shelf. So that you couldn't go into the bin yourself, so the clerk would go to the bin, and he'd say, "Madam, how many cups of sugar you want?" You'd say, "Five cups." He would go in there, put five cups in there, put it in a bag, take the bag up, and then say, "Okay. Would you like some meat?" "Sure." They would have a big shank of cow, and they'd go and cut the meat off the cow right there. If you wanted some pickles [crosstalk]...
Jason Feifer: Can you imagine standing there while all this happens and, even worse, standing there without being able to check Twitter to keep you occupied? The inefficiency of just hearing about it makes me want to jab my eyes out with pickles; though, I suppose in a generation or two, people will hear how we shopped... standing in line, waiting for some cashier to scan our items and take our cash money, and they'll be like, "How did you tolerate this madness?" And I guess we'll be like, "Twitter?" Bt that was it. That's what shoppers of the 1800s had.
So, okay, now you got everything you need to know to appreciate what comes next, which is this: Some enterprising entrepreneurs begin to realize that if they own and operate multiple retail stores, they can enjoy this economy of scale, too. They can buy more things, find more efficiencies and sell products at lower prices. And the man generally credited with being the first to do this was a man named George Huntington Hartford. In 1878, Hartford bought a company called the Great Atlantic and Pacific Tea Company or ANP, as it became known. At the time, it was a small chain of tea and coffee stores in the New York region, but Hartford had a bigger vision. He added things like groceries and butchers to his stores and expanded rapidly. By 1900, he had about 200 stores. By 1930, he had 16,000 stores.
I mean, just to give you a sense of how forward thinking this was, let me skip ahead here for a second and play you this commercial from A&P in 1979, exactly 101 years after Hartford bought the company. So, it opens on these two women shopping in an A&P, and they're looking at some prepackaged steaks.
Voice Clip (A&P): This looks right, but I'll ask the A&P butcher.
Voice Clip (A&P): Oh, come on, Lu. This is a supermarket, not a butcher shop.
Voice Clip (A&P): Is this right for London broil?
Voice Clip (A&P): I'd use this. It even costs a little less.
Voice Clip (A&P): Thanks.
Voice Clip (A&P): Say, A&P is a butcher shop with supermarket prices.
Jason Feifer: It's such a cliche of commercials, isn't it? Two people, one of whom inexplicably doesn't understand where they are or how the world works so that they can be the foil for the smarter one. "What is this place for humans? It sells meat for eating?" But there you have it. The George Huntington vision still in place... a store that sells groceries, meat, whenever you need, with an emphasis on price.
Today, it's how we shop. It just seems intuitively obvious, but in the early 1900s, it was a radical idea, and it got more radical. Remember how this was an era when food packaging was just coming about? A&P had the idea to put these packages on shelves, and then let people wheel carts around to pick up their own food. That way, everyone gets their food faster, which means the store can sell things faster, which means their margins are higher and they can lower the prices further, By the way, if you have kids like me, then we all have this innovation to thank for the crap our kids buy, because once moms were walking around chain stores, picking up their own food... which, again, that was a crazy idea back then... that meant kids were walking around, looking at the food, which meant marketers realized that if they put stuff there that would appeal to the kids, the kids would guilt the moms into buying it, which is where you get:
Voice Clip (Full House): (singing)
Jason Feifer: I mean, that audio is from Full House. You can't actually blame A&P for Full House, but Ranger Joe was the name of the first sugar-coated puffed cereal to be sold to kids. It showed up in 1939 and, literally no joke, it advertised itself by saying, "No sugar required" on the bag. Yeah, no need to add sugar to your sugar.
All right. So A&P takes off, and many other companies follow. The era of the chain store is upon us. The very first thing that people notice is the prices. Food at the chain stores are less expensive than anywhere else, and that is a big, big deal. The New York Times back then is full of stories about the price drops; though in a strange twist, they never actually tell you which stores have the cheap prices. For example, there's this one story from December 4th, 1920, with the headline, Bread and Butter Drop, and here's part of the story:
Voice Clip (Rose Eveleth): One of the large chain stores is now selling 16-ounce loaves of bread at nine cents, a drop of two cents from the price charged in most other stores. The reduction is made possible, it is explained, on account of the decrease in the price of flour.
Jason Feifer: It goes on. There's another piece that year that reported on the low price of sugar at a chain store, but again, never names the store. I's literally news you can't use. It's like the worst blind item. And I'm guessing here, but maybe this was because the paper didn't want to seem to be actively directing customers away from all the smaller stores that bought ads in the paper. That would make sense, because these price drops may have been good for consumers, but they were actually very, very controversial in the world of business and politics.
And that brings us to our grand opposition to chain stores, which would span decades. You heard a little of it at the beginning of this show. I mean, how can anyone forget a line being drawn between chain stores and Hitler. But before we move on, I want to give you a sense of just how panicked people were over these things and how dire their predictions were.
So first, there were the economic arguments. Here's North Dakota Senator, Gerald P. Nye, on the floor of the U.S. Senate, evoking the book of Revelation to condemn chain stores as a cancer spreading and devouring as it goes the whole tissue of the nation's economic body. There was also the patriotic argument, claiming that big stores were hurting little stores, and little stores represented freedom and democracy. Here's Texas Representative Wright Patman again, making that argument.
Wright Patman: History shows that the elimination of the independent businessman has been the first step in the development of totalitarianism.
Jason Feifer: And then, you had the moral argument. Senator William Proxmire of Wisconsin, for example, suggested that chain stores would lead to teenage delinquency, because young teens wouldn't be working in their parents' stores after school. Our historian, Rob, has this one.
Rob Atkinson: So, Proxmire says, "Even if the family retail store were an economically inefficient operation, its contribution to family and community would be a strong argument in favor of its preservation."
Jason Feifer: And then, the politicians get to work. In 1927, Maryland passed a law that disallowed any chain that operated more than five stores. Now, that law would get struck down by a court as unconstitutional, but then Indiana passed a law that significantly raised taxes on any company that opens a second store, and that one gets upheld by the U.S. Supreme Court in 1931.
Susan Spellman: So here you have the highest court in the land in 1931, saying, "Yes, chain stores can be taxed at a different rate than other retail enterprises." And so, many people thought, "Aha, we found the golden ticket that's going to help us get around this chain store onslaught problem."
Jason Feifer: That's Susan Spellman, a professor of history at Miami University in Ohio, and the author of the book, Cornering the Market: Independent Grocers and Innovation in American Small Business, and she says that this gets other states in on the action, though they don't always find it that easy to accomplish their goals. For example, Wisconsin tries to pass an anti-chain store law but struggles to do it in a way that didn't hurt it's more ambitious local business.
Susan Spellman: So, if your name was Bob Smith, and you had two Smith's Groceries, well, you would be taxed as a chain under Wisconsin law, even though you're Bob Smith, local grocery guy, and you're not A&P, massive conglomerate.
Jason Feifer: Because what is a chain store? I mean, we've been talking about it all this time, but seriously, what the hell is it? Is it a company with two stores? Three? Five? Ten? At what point does Bob Smith go from a local guy to a big bad guy? It was hard to establish, and that's perhaps why states start to get creative about other ways to knock out the chain stores. For example, they start going after the chain stores' ability to benefit from economies of scale. California and then, eventually, nine other states pass laws that forbid any company from selling their wares at a discount to chain stores, so no more bulk pricing. And there's also an effort to forbid railroads from giving chain stores a bulk shipping rate.
Now, all of this sounds totally foreign to our modern ears, because yeah, politicians today talk a big game about supporting small business, but they're not exactly passing policies that are hostile to big business. And after going through all the inefficiencies of the old way of shopping, as we just did, it's like, "Why were people resisting chain stores that were making shopping better and lowering prices?" There are a couple of answers to that, and they're all kind of knotted together, so we're gonna have to pick them apart. And the first one is pretty simple. It was about nostalgia for simpler times and the old ways of doing things.
Benjamin Waterh...: The moral argument was, from the beginning, similar to the way you hear it today, that there is something inherently good and virtuous about a business owner who is tied into the local community; who is invested in it; who is, themselves, an owner of property, a taxpayer, in the community in which they operate; and therefore, they're making decisions that are in the interests of the local community.
Jason Feifer: That's Benjamin Waterhouse, a history professor at the University of North Carolina at Chapel Hill, and author of the book, The Land of Enterprise: A Business History of the United States.
Benjamin Waterh...: The idea or the argument is that if the company is headquartered in New York City or in Bentonville, Arkansas, they don't care about the particular town that they're in.
Jason Feifer: And some people still make that argument today, but the thing is... and this honestly was one of the most surprising parts of researching this subject for me... that image of the kind, local business was very often a fiction. We have this image in our head of the general store owner from simpler times, and it's this very wholesome thing. The chap behind the counter, who rustles little Jimmy's hair and forms the heartbeat of the town, we think of him as sounding like the Jimmy Stewart character, George Bailey, from It's A Wonderful Life, standing up to greedy old Mr. Potter.
Voice Clip (George Bailey): Just remember this, Mr. Potter, that this rabble you're talking about, they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?
Jason Feifer: But Rob says that's just not true.
Rob Atkinson: A lot of stores were like Mr. Potter. They weren't like Jimmy Stewart. They were like Mr. Potter. So you had a few elites who really owned almost everything in these towns. Particularly in the South, they would own the general store, they would own the bank and you could not get a very good deal. I mean, the prices were super high. They made big profits. They tried to keep out companies to give choice to these consumers. And this was also a big deal, by the way, for African Americans, who lived in central cities at the time so it wasn't just rural white poor. A lot of African Americans, when A&P came along... oh, my God... they were the biggest supporters of it, because finally, they got out from under the thumb of these white shop owners, who would go into their neighborhoods and just extract rent from them, if you will, and rip them off, and they didn't have choices.
Jason Feifer: Prices were high at these little stores really high. And they did generally offer credit to local people, like, "Oh, we know you're good for it. We'll put it on the ledger," and chain stores notoriously didn't do that. But prices, prices really mattered here, and especially when inflation intensified after World War I, people had trouble affording food at these local places.
I'm reading here from this book called Building a Housewife's Paradise: Gender Politics and the American Grocery Stores in the 20th Century by Tracy Deutsch, and she says, "Writers from a broad span of class and ethnic backgrounds regularly portrayed neighborhood grocers not as community pillars, but as extortionists and profiteers." And then, she points to this amazing Chicago Tribune cartoon from 1917. It's this dark image showing a road where a bunch of cars are stopped, and the people in them are being held up at gunpoint by various robbers, and the people in the cars are all saying:
Voice Clip (Chicago Tribune): Sorry, old chap, but we're dead broke. We just paid our butcher this morning.
Rose Eveleth: It's all right. We're used to being held up.
Speaker 11: You remind me of our grocer.
Jason Feifer: And by the way, the high cost of food didn't just drain people of their earnings, it also exacerbated all sorts of social ills. Women were often blamed for not doing enough to lower the cost of food for their families. For example, in 1924, the former president of the United Masters Butchers Association of America reportedly told attendees of a convention that:
Former Presiden...: The lazy housewife who will not study a cookbook to learn how to prepare all kinds of meats in all kinds of ways is to blame for the high prices of meats.
Jason Feifer: A publication called the Chicago Jewish courier, meanwhile, blamed women for not taking their own bread, and thus buying too much bread, and thus driving up the price of bread at stores. Come on women, and on it when, which meant, yeah, you better believe women love these chain stores, which lowered the price of bread and lowered the emotional temperature in their households. So in sum, America was nostalgic for the local care of local stores, but that really meant, as is so often the case with nostalgia, that it was longing for a thing that didn't exist, and if that's the case, what else was motivating this backlash against the chain store?
Well, fortunately, someone is willing to come right out and say it, and that someone is the Midland Druggist and Pharmaceutical Review, a trade publication for local pharmacists. In 1914, it published an article called Growth of the Retail Octopus, and the author of this article could have really used a thesaurus, because they primarily had one word for chain stores, which was evil as in:
Rose Eveleth: There was only one way to prepare for this evil and to combat it, and only one.
Jason Feifer: And also: Rose Eveleth: It would mean annihilation to the businesses of the independent retailers and wholesalers into whose field this evil extended.
Jason Feifer: And: Rose Eveleth: The chain store evil is a greater evil than that of the mail order house or the department store, for when it comes, it embraces all their evils and brings them closer to home.
Jason Feifer: That one's my favorite. So many evils. You get an evil, and you get an evil. But let's not be too hard on this writer, because they were also unusually and refreshingly honest about their motivation. I mean, I've been making this podcast for years now, and I cannot recall ever coming across someone who's so openly admits why they're calling something evil. Ready for it? It's so good. Here it is: Rose Eveleth: We make no secret of the fact that our opposition is primarily for our own immediate interest.
Jason Feifer: Our own immediate interest. Isn't that... I mean, it's, it's actually kind of touching. Thank you. Thank you, Midland Druggist and Pharmaceutical Review of 1914, for admitting what almost nobody else across time will ever admit, which is that you're demonizing something not because it's bad, but because it's bad for you.
And by the way, the woman you heard reading that pharmaceutical review... and you've heard her voice elsewhere in this episode already... her name is Rose Eveleth. She is the host of the fantastic podcast, Flash Forward. Each episode of her show explores a possible, or not so possible, future scenario, like what would happen if we killed all the mosquitoes, or if California left the United States? It's super fun and interesting. Flash forward, check it out.
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Jason Feifer: And speaking of future, the future of chain stores all kind of snaps into place now, doesn't it? I mean, we have now established that a lot of this resistance was coming from existing industry... independent stores who felt threatened by the chain stores. And back then, independent stores have the stronger lobbying power. Remember, they were largely owned by local kingpin types, who owned lots and lots of stores and land. Local kingpins, they funded the local politicians, and the local politicians passed laws to protect the local kingpins. And that's where you get so many of these anti-chain store laws, because, as a wise man in a parking garage in Washington, D.C. once said: Speaker 12: Follow the money.
Jason Feifer: There's a lot more history there: The rise of antitrust laws, the growth of the chain store lobby and more, but I'm not going to bore you with it all, because you ultimately know how it turned out. The chain stores, basically, won. Independent retailers gave up trying to stop the spread of chain stores, and instead, started focusing on legislation that would just help small businesses, and that's more or less where we are today. And I should say, the governmental effort to help small businesses can be a touchy subject, depending on who you talk to. I'll just lay it out real quick. One side is represented by Rob Atkinson, who gave us most of the history in this episode, and full disclosure, feels the government should not be intervening on behalf of small business.
Rob Atkinson: You look at the evidence... big companies, on average, in the United States, they pay a lot more in wages, they injure their workers less, they're more productive, they're more innovative, they give their workers better benefits, they hire more women and minorities. I mean, it's just the whole sort of narrative we have was wrong, and we just wanted to correct that.
Jason Feifer: And on the other side is people like Tim Wu, a professor at Columbia Law School, who wrote a book called The Curse of Bigness. Here he is speaking at the Chicago Humanities Festival.
Tim Wu: We are engaged in what I consider a very dangerous experiment in our times. We have, over the last 40 years, virtually abandoned all the laws that control monopoly, control concentration of the economy, control the world and U.S. economy from becoming dominated by a small number of firms. This has, in turn, led to a pervasive inequality, a sense of grievance among a wide swaths of the population, a feeling that I think is very sympathetic that people are not doing as well as their parents.
Jason Feifer: And I'll leave that question for them or you or whoever to battle out, because personally, I'm more drawn to a question that's, I don't know, more personal, more gut level, and that's a question of culture. In 1933, a Kansas City businessman named Charles H. Lyon took what he called "an extended tour by motor of the Central Plains." And then, he wrote to President Franklin D. Roosevelt, about what he'd seen, and it included this:
Charles H. Lyon: Every good town had the same stores. The downtown of one city was a replica of the next one, and for every chain store that reared its head, three individually owned stores laid down and died.
Jason Feifer: And despite all I now know about this battle, about how those original local stores may not have been so great anyway and about how much economic value the chain store created, I have to admit that this does get to me. I sympathize with that guy in 1933, because, I mean, we all see it today, right? It's a bummer to travel this country... hell, to travel the world... and see, basically, the same stores everywhere. I was recently in Tokyo, and there was a 7-Eleven and a McDonald's literally within a block of my Airbnb and it's like, I don't know, I have this emotional reaction to it, this sense of loss that maybe isn't economically logical or whatever, but it's there. So, I put it to Rob, the champion of big business. I said, "All these people in the early 1900s said we lose something when chain stores came along. And policy beliefs aside, is that true?"
Rob Atkinson: Sure. There is truth to that, I mean, but it really, if you wanted... You can't just go after small retailers. You'd have to say, "Well, we don't really think we should develop the automobile. We shouldn't develop, by the way, the skyscraper, because that leads to much bigger cities. And we shouldn't develop the factory, because that leads to much bigger operation." So, there's no question that society has changed. It's more anonymous and less sort of tight knit community when everybody lived in like Winesburg, Ohio, in the famous novel. Yeah, so in those little communities like Winesburg, Ohio, people would work locally; they'd shop locally; if they traveled, they might go maybe 100 miles once or twice in their life, it was a big deal. But that came with an awful lot of costs. People didn't have very much money; the healthcare was terrible; people, they couldn't go to Paris or they couldn't even go to the Grand Canyon. They're limited in terms of the information and entertainment they can get. So yeah, it came with a cost, but I think when you look at all the vast benefits that we benefit from that now, I think most people would say, "Yeah, I like the world we're living in now better."
Jason Feifer: And there's one last thing that really struck me. It's a story from The New York Times, December 19th, 1920, and it's called, What a Salesman Told a Druggist. That was the headline. It's just this little tale, almost like a fable, that, for some reason, the newspaper printed his news, and it tells the story of a local drugstore, an unnamed drugstore who knows where, which is opened one morning by a particularly grumpy druggist. Two people walk into the store. The first is a customer, who asks for two nickels in exchange for a dime, so he could use the pay telephone. "The druggist," and I'm quoting here from the piece, "glared and half shaking his head in disgust, punched the cash register maliciously and threw down the two nickels." When the customer walked away, the druggist turns to the other man in the store, a traveling salesman, and the druggist says: Druggist: That's the kind of thing that makes this a fine business. You wake up in a cold gray dawn, rustle out of bed when others are just turning over for another snooze and open up shop so that you can hand out change for the telephone and sell a two-cent stamp. Take a tip from me, young fella, and don't ever let them tell you a druggist doesn't earn his money. He's just a goat. That's what he is.
Jason Feifer: But the traveling salesman is having none of it. He... or she, because I'm bringing Rose back here... says:
Rose Eveleth: Say, old man, do you realize that many a business house is paying out real money to get just what you are complaining of?
Jason Feifer: The druggist didn't understand what the salesman meant, so the salesman lays it out. He says that companies and salesmen like him have to spend tons of money to advertise and travel and get themselves in front of customers, but this druggist has a store. He has a place where customers just come, where they're interested in spending their money. But what does the druggist do? He complains about them. He does nothing to woo them... no special displays, no customer service. And then, the salesman really lets into him.
Rose Eveleth: The trouble with a lot of small storekeepers, who are complaining of competition from mail order concerns and the chain stores, is that they're doing nothing, simply nothing, to improve their own business chances. They're not only overlooking opportunities that the bigger fellows are capitalizing at every turn, but a good many have the idea that customers were specially created to work their grouches off on. You gave me a tip. Now let me give you one. One of the best paying investments is to be obliging. Now, let me have some razor blades.
Jason Feifer: That quote should be required reading for everyone going into business, and I think it's summarizes everything... all of this tension between small and big, between what's fair and what's possible. Was in is it hard to compete against the chain stores? Yes, of course. Did their spread come with some downsides? No question. But back then, just like is often the case now, the people who feel threatened by something new, put all their energy into resisting, instead of putting their effort into competing. If the world changes, you can't dig your damn heels into the ground. All you do is stop, and let everyone else pass you by. No, no. What you do is innovate. You change. You adapt. You accept that just because something worked in the past, that doesn't mean it will work again today, and you can't force the world around you to stop and accommodate you, because it doesn't work that way.
And let's not forget, chain stores aren't some enormous monster that came unexpectedly out of the sea like in Beowulf. They're just small stores that grew big, that outmaneuvered their rivals, and although they're hard to compete against, they can still fall hard. Hell, when's the last time you shopped at A&P? It was the largest chain store in the country for decades, and now:
Voice Clip (A&P): A&P is assuring customers that their bankruptcy will not affect most shopping experiences.
Jason Feifer: You know, unless you consider the company totally disappearing to be a disruption to your shopping experience. Maybe a little. Meanwhile, Sears had come along and everyone thought, "Oh, no. Nobody can beat Sears." But today, Sears is trying to come out of bankruptcy. And after Sears was Walmart. "Oh, no. Nobody can be Walmart." But now Amazon is making Walmart sweat bullets. And I think it's entirely possible that my three and a half year old son will grow up to have no earthly idea what the hell Walmart was. And what's Amazon's fate? It's not going to last. Nothing lasts. Small business becomes big business, and that big business becomes slow, and then another small business sees an opening and innovates and grows and kicks that old big business' ass, and then the cycle happens all over again. You want to win? You don't resist. Resistance is for losers. You change. That's the lesson of chain stores. But hey, listen. I'm still going to buy my craft beer, because small, big, we can have both. And that's our episode.
I have one more little delight for you though. It is a song written by a Pessimists Archive listener and inspired by his mother-in-law, who thinks the world's going to hell, so I know you want to hear that. I certainly did. But first, let me tell you that if you liked this show, please help us grow by telling a friend and subscribing and leaving a review for the show wherever you get your podcasts... iTunes, wherever. You can also find us on Twitter at @pessimistsarc, that is pessimists-a-r-c. You can email us at email@example.com or visit our website, pessimists.co, where we have links to lots of things discussed on this episode.
The Pessimists Archive team this episode was myself, Louis Anslow and Chris Cornelis. Our archival readers, those folks you heard reading all those old pieces of writing, were, of course, Rose from the great podcast, Flash Forward, as well as my colleagues from Entrepreneur Media, Conrad Martin and Dan Bova. Special thanks to the folks you heard on the show: Rob Atkinson, Dan Waterhouse, Susan Spellman, as well as Daniel Scroop, Paul Ingram and Hayagreeva Rao... I'm so sorry, I don't know how to pronounce your name... whose research in American Quarterly and the American Journal of Sociology was immensely helpful, and to Jonathan Smeltzer for audio help. Our theme music is by Casper Babypants. Learn more at babypantsmusic.com. Pessimists Archive is supported by the Charles Koch Foundation. Learn more about their foundation at ckf.org/tech. And we're also supported by Element AI. Check out their podcast, AI Element.
And now to the final moment you've been waiting for. So there's this guy named Danny Nielsen, and he writes me recently with a great story of how he found our show. His mother-in-law was visiting, and she watches a lot of news and bemoans the good old days and that inspired him to write a little song about it. And when one of his friends heard that song, the friend said, "Oh, you've got to check out this podcast, Pessimists Archive. Yes, that's what we're here for folks. So all right, I'm going to just play a little bit. You can hear the rest of it on our website. But all right, a little bit of Danny's song.
Voice Clip (Danny's song): (singing)
Jason Feifer: All right. That track is going gold, baby. Thank you. Thank you, Danny. All right. That's what we've got. Thanks again for listening. My name is Jason Feifer, and we'll see you in the near future.
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