One of the best business books Mary and I have read in the past few years is, The Great A&P and the Struggle for Small Business in America. There have been huge improvements in food production and distribution during the last 150 years, chronicled well in this book. A&P was a much larger company than Wal-Mart 50 years ago. I excerpted two passages.
Canned goods, like cardboard boxes, were an old idea that became economical only in the 1880s. Canned goods were first used to feed Napoleon’s army in 1795, and the first U.S. canning plant was established in 1819. But cans were expensive: each was made of tin pieces individually cut with shears and then soldered together, with a skilled can maker turning out a hundred cans per day. The industry got a boost from military orders during the Civil War and the start of salmon canning on the Pacific coast in 1864, and by 1870 the United States had over a hundred plants canning fruits, vegetables, fish, and oysters. The key inventions came in 1874, when two Baltimore men, A. K. Shriver and John Fisher, found alternative ways of controlling temperature to avoid explosions during the canning process. A new machine to cap cans was introduced in the mid-1880s, reducing the need for skilled cappers, and the first successful labeling machine was invented in 1893. Automation made canning cheap: one man could cook five thousand cans of tomatoes a day in 1865 but four times that many in 1894, at a lower daily wage. More than a thousand canneries were operating in 1890, and expansion was so rapid that by 1900 food processing accounted for one-fifth of all manufacturing in the United States. Cheap canning provided grocers a wide assortment of branded merchandise to sell.
Like many successful companies, A&P was constantly harassed by the government.
The cold financial details revealed in days of such testimony presented a compelling yet simple story. Firm orders from a retailer with the size and national scale of the Great Atlantic & Pacific Tea Company enabled grocery manufacturers to lower their production costs and promote their products in ways that would otherwise have been impossible, and in return the chain expected a share of the manufacturers’ gains. But while business school professors saw such testimony as evidence of economic rationality, the anti-chain forces read it precisely the opposite way. A&P’s prices were “close to 10 percent” below his own, testified the grocer Harry Wadsworth of McKeesport, Pennsylvania, “and if I had their discounts and allowances, I could meet them easily.”
In any event, evidence about efficiency would never address the underlying concerns of Wright Patman and millions of others, who feared the demise of a society in which personal relationships were all-important and hardworking men had the opportunity to rise through their own efforts. Where experts pointed to scientific management and consumer benefits, Patman saw “the huge chain stores sapping the civic life of local communities with an absentee overlordship, draining off their earnings to his coffers, and reducing their independent business men to employees or to idleness.” The disagreement concerned worldview far more than economics, and it could not be bridged with explanations about the cost of advertising yeast.