Red Circle & Gold Leaf

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(7 of 9)

"The grocery business must be a good one," one of A & P's top men likes to say, "there are so many stupid people in it." John himself insists that he and George were almost the stupidest of the lot; they almost let the self-service supermarket go by without recognizing it as the biggest revolution in the food business since John's economy store.

When supermarkets sprang up in the early '30s, Mr. George and Mr. John thought them mere Depression pan-flashes. Not until their own sales tumbled did they realize that supermarkets were putting their own "combination" stores out of business. But if the Hartfords started late, they moved fast, started opening supermarkets right & left, and added such wrinkles as pre-packaged meats & produce, weighed and pricetagged. They expanded by contracting. Each new supermarket closed some six of the old-type A & Ps so that the number of stores dwindled from 1930's peak of 15,737 to today's 4,682. Yet they built so much more volume that sales, payrolls and employees rose higher than ever.

Increased size inevitably brought severer headaches. Years earlier the Hartfords had set up teams of traveling auditors to check price tags and weights in all the stores and report back to them directly, thus keeping tabs on the empire. There was always the chance that a dishonest store manager would overcharge, short-change or underweigh. But honest managers also were squeezed. They got so little leeway in their allowances for breakage, spoilage and pilfering that some of them felt they had to cut honesty corners to make a good competitive showing.

In 1936 the reckoning came. John Hartford sat and squirmed in a Washington court while Bureau of Standards investigators recited how they had been short-weighed on 50 chickens bought at A & P stores. John stormed back to the Graybar Building determined to cull out all such flipmagilding. He sat down and personally signed letters to 40,000 men & women in his employ warning them, on penalty of discharge, that every A & P customer "must get 16 ounces to every pound." Moreover, John set up a big board at headquarters to mark every supermarket's quarterly showing, raised hob whenever one turned up the white card indicating a "stock gain," i.e., a dollar "take" exceeding the retail value of all goods sold, a sign of possible overcharging or short-weighing. Now, says Mr. John firmly, virtually all of the supermarkets consistently show stock losses.

How Big? The A & P's enormous size brought far greater problems. The Government's trustbusters brought the company to trial on charges of violating the Sherman Anti-Trust Act.

In convicting the A & P in a criminal suit (and fining it $250,000), Illinois Federal Judge Walter Lindley found there was evidence that the A & P had time & again sold below cost to beat down rivals in price wars or to gain volume by switching profits from its non-retail subsidiaries to stores that lost money. Moreover, he found that A & P's buying subsidiary, Atlantic Commission Co. (Acco), so dominated the produce market that it not only bought the best produce for A & P but sold what it did not want to A & P's competitors at a profit, thus making sure that their costs would be higher.

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