Bag of Bones Page 4

  Retail history indicates that Stewart was not the originator of clearance sales. They were first put into effect in Paris at Bon Marché and other department stores. Still, it can be clearly stated that Stewart was the first American retailer to adopt the policy as part of the overall operation of his retail business.

  Stewart sold his merchandise for cash and allowed for a limited amount of purchases on credit, with customer credit extended at most for six months. He also had a liberal, although seldom advertised, return policy that allowed customers to return unsatisfactory merchandise for exchange or refund. Unique to Stewart’s return policy was that a reasonable discount would be given for returned merchandise, meaning if five yards of fabric was returned, he would give the customer credit for four yards, and if the price of the merchandise had been lowered since the purchase, the customer would be given credit at the new reduced price, not the original cost. Accordingly, as all of A. T. Stewart’s retail innovations caught on with New York’s shoppers, his empire and personal wealth grew exponentially.

  2

  THE CAST IRON PALACE

  In which A. T. Stewart expands his wholesale, retail, and manufacturing businesses, employing two thousand people and earning himself approximately two million dollars a year. Stewart undertakes one of his grandest philanthropic gestures by planning a “Working Women’s Hotel” in New York City, so working women will be able to find safe, comfortable, and reasonably priced accommodations. He buys more than seven thousand acres of land in Hempstead, Long Island, where he intends to build a model community—Garden City.

  To accommodate his expanding empire, in 1862, Stewart bought part of the old Randall Farm, which was bounded by Ninth and Tenth Streets, Broadway, and Fourth Avenue. There, he erected a six-story, cast iron building that included a great emporium and glass dome skylight. This store covered two and a quarter acres and cost nearly three million dollars. It was quickly dubbed the Cast Iron Palace, and it became the centerpiece of all of Stewart’s business in New York City. The Marble Palace on Broadway was used for his wholesale operations.

  Stewart’s sales staff grew accordingly. He had begun his small business in 1823 with one or two salesmen, and by the time the Cast Iron Palace was built, he employed more than two thousand people in his stores. The personnel logistics of the Cast Iron Palace were massive. According to one contemporary magazine estimate, in this single retail store, one general superintendent had nineteen assistants. Each assistant was the head of a particular department. More than a dozen cashiers within the various departments received and paid out money, while more than two dozen bookkeepers kept the record of the day’s transactions. About thirty ushers directed shoppers to their desired departments in the store; two hundred boys received the customers’ money and brought back their change from their purchases. There were four hundred and seventy sales clerks (some of whom were women) and fifty porters. And nine hundred seamstresses were employed to make alterations for merchandise purchased at the huge store.

  The average daily number of customers visiting Stewart’s Cast Iron Palace was twenty thousand. During the store’s busiest season, Christmas, more than thirty-five thousand people were estimated to visit in a single day. Customers ranged from the very wealthy, who might spend thousands of dollars during their visit, to the lowly charwoman, who might buy a single piece of cloth that she would later use to sew a dress.

  By 1870, it was estimated that the Cast Iron Palace brought in an average of sixty thousand dollars daily, while on some days the store’s cash receipts reached almost one hundred thousand dollars.

  Stewart earned an income of two million dollars in the first year that the Cast Iron Palace was open. In 1865, he earned nearly four million dollars. From the Cast Iron Palace retail business and the Marble Palace wholesale business, as well as all his international and domestic manufacturing concerns, Stewart earned an average of three million dollars a year over the course of the next six years. Using the Consumer Price Index based on relative value, Stewart’s earnings would equal forty-one million dollars by today’s currency standards.

  Stewart wasn’t the only innovative retailer to establish himself in New York City. An array of retail businesses burst on the scene. Stores such as Macy’s, Lord & Taylor, and Brooks Brothers were launched along Broadway and Sixth Avenue, between Ninth and Twenty-third Streets. The area became known as “Ladies’ Mile,” because of the profusion of clothing and dry-goods stores dedicated to the growing needs and desires of women. Besides the department stores, there were a multitude of concert halls, theaters, art galleries, furniture stores, and piano showrooms.

  Henry Sands Brooks had long before begun to address the clothing needs of New York City men when he opened H. & D. H. Brooks & Co. in April 1818 at Catharine and Cherry Streets. In 1833, his son Henry Jr. took control of the business and in 1845 introduced the first ready-to-wear suits for men. His three sons, Daniel, John, and Elisha, took over the business in 1850 and began their trademark “Brooks Brothers” for selling boys’ and men’s clothing.

  In 1826, Samuel Lord opened his first small dry-goods store at a Catherine Street location. In 1838, his wife’s cousin, George Taylor, became a partner. In 1859, Lord & Taylor moved to Broadway and Grand Street, establishing itself as one of the most prized women’s fashion stores.

  In October 1858, a former Nantucket sea captain and whaler, Captain Rowland H. Macy, opened Macy’s department store in New York City on the corner of Fourteenth Street and Sixth Avenue. Macy, a Quaker, had failed at the retail business several times before starting this successful enterprise. He sold his merchandise like Stewart, at a fixed price, advertised his store in the city’s newspapers, and discounted his merchandise to move product. From his days as a young boy sailing on the Emily Morgan whaling ship, Macy had a red star tattooed on his hand. He used the red star as the symbol for his store, and it remains part of the Macy’s logo to this day. The store sold men’s and boys’ clothing including coats, vests, and pants and women’s coats, cloaks, raincoats, dresses, skirts, blouses, and hats. Macy was one of the first retail merchants to hire women executives, and in 1866 he expanded his store by purchasing several adjoining buildings. Ultimately, he owned nearly a dozen buildings. When he died in 1877, he was reported to be worth close to two million dollars. In 1924, Macy’s Herald Square location in Manhattan became the largest store in the world.

  In 1872, Joseph and Lyman Bloomingdale opened Bloomingdale Brothers Great East Side Bazaar at 938 Third Avenue in New York City. The completion of the Third Avenue elevated railroad connected lower Manhattan to this newly established uptown store. In 1886, the brothers built a new store that took up an entire city block at Third Avenue and Fifty-ninth Street.

  In 1865, Benjamin Altman opened his first store on Third Avenue. He later bought his brother’s store on Sixth Avenue, where his business, B. Altman & Company, remained for the next thirty years. In 1906 the store moved to Fifth Avenue and Thirty-fourth Street. Altman’s became one of the most stylish stores on Ladies’ Mile.

  All along Ladies’ Mile, department and dry-goods stores flourished, their attractive display windows overflowing with merchandise, the wide sidewalks packed with eager shoppers, and the streets lit by gas and eventually electrical lights. Besides Stewart’s Cast Iron Palace, and B. Altman & Co., there were Adams & Co., H. O’Neill & Co., Stern Bros., James McCreery & Co., and a multitude of smaller emporiums catering to every need of New York City women.

  Every store had its specialty. B. Altman & Co. was widely known for the best ladies’ attire. H. O’Neill & Co. was renowned for its millinery, and Stern Bros. was known for its silks and laces. Ladies’ Mile was in its heyday in the Gilded Age.

  But it wasn’t just in New York City that the phenomenon of the department store and retail merchandising was blossoming. In Philadelphia, John Wanamaker started his Oak Hall Clothing Bazaar in 1861. Wanamaker was a master of ad
vertising and even earned himself the dubious title of “The Father of Modern Advertising.” Huge posters, balloons, and full page newspaper ads all contributed to Wanamaker’s success. In 1876 he built a new store replete with skylights and gas chandeliers and heralded it as “the largest space in the world devoted to retail selling on a single floor.” In 1896, Wanamaker would buy the Cast Iron Palace.

  And there was the enormously successful Marshall Field in Chicago. Marshall Field joined Levi Leiter in 1865 and opened a store in the Windy City’s downtown. The store’s slogan was, “Give the Lady What She Wants,” and it offered fashionable merchandise at low fixed costs. After the Chicago Fire in 1871 gutted their original store, Field and Leiter opened a new one. Field ultimately bought out his partner and built a new twenty-story store that covered an entire Chicago block, and by 1914, it became the largest department store in the country.

  Also in Chicago in 1872, an enterprising retail merchant named Aaron Montgomery Ward mailed the first general merchandise catalog, a single sheet of fifty items, beginning the era of the catalog mail order business. By 1876 the catalog had grown to 150 pages, and by 1888 the company’s annual sales reached one million dollars. When Ward died in 1913, annual sales for the company were approximately forty million dollars.

  With the advent of department stores came other innovations in New York City life and style. The use of plate glass windows originated with the department store. They were introduced as a source of light to allow shoppers to adequately view merchandise, but soon they became an integral part of marketing. Windows on the ground floors of department stores became a prime location to show off wares. Department stores could put all their most important merchandise on display, and women shoppers gained the advantage of being able to browse a variety of merchandise without ever entering the store.

  As window shopping became the accepted custom, sidewalks had to be widened to accommodate shoppers. The new wide, paved sidewalks assured fashionable women walking, browsing arm in arm and side by side along Ladies’ Mile, that they would not get their dresses dirty as they crossed paths with other shoppers or stopped to eye the products on display.

  Another innovation aimed primarily at women shoppers was the addition of streetlights to allow shopping into the evening, while ever increasing public transportation options—elevated trains, trolleys, and buses—provided shoppers with easy, reliable, and safe means of access to the stores.

  As Mona Domosh writes in Invented Cities: The Creation of Landscape in Nineteenth-century New York and Boston, “The department store, then, helped turn the private domestic world into a realm of publicly purchased and appraised commodities; it was integral in the association of women with consumerism, thus making continuous consumption ideologically acceptable; and it was by and large responsible for feminizing the downtown.”

  Of all the growing retail concerns in America, A. T. Stewart’s was the most successful. He established a worldwide business not only in retail but also in wholesale and manufacturing. He had branch offices in Philadelphia and Boston, as well as in Manchester, Nottingham, and Bradford, England; Paris and Lyons, France; Belfast, Ireland; Glasgow, Scotland; and Berlin, Germany.

  All English merchandise was bought and shipped from Stewart’s Manchester offices. In Belfast he had a plant where linens were bleached. At the branch in Glasgow, Scottish goods were bought and shipped to the American store. In Paris, merchandise from France, Germany, and East India was bought and sold. In Lyons, Stewart established an enormous network of warehouses for silk. In Berlin, there was a woolen factory and warehouse. In America, Stewart established manufacturing enterprises at factories such as the Mohawk Mills in Little Falls, New York; the New York Mills in Holyoke, Massachusetts; the Woodward Mills in Connecticut; and the Yantico Mills, in New Jersey. All of these businesses kept Stewart’s Cast Iron Palace stocked with the most fashionable new merchandise. The annual expenses were more than one million dollars. The value of the merchandise sold was estimated at fifty million dollars. And his overall payroll, worldwide, included more than seven thousand employees.

  “The advantages we possess are so superior that competition of small dealers is out of the question, and the moment they feel the pressure they cry out against monopoly, and attribute all kinds of vindictiveness to the firm. But, after all, the public at large are benefited. We are enabled to offer them the largest stock at the smallest cost, with all the guarantees that are inseparable from a responsible house, whose name and honor are part of the business.”

  —ALEXANDER TURNEY STEWART, 1862

  “People come to me and ask me for my secret of success; why, I have no secret, I tell them. My business has been a matter of principle from the start. … If the golden rule can be incorporated into purely mercantile affairs it has been done in this establishment. … The customers are treated precisely as the seller himself would like to be treated were he in their place … nothing is misrepresented, the price is fixed, once and for all, at the lowest possible figure, and the circumstances of the buyer are not suffered to influence the salesman in his conduct in the smallest particular.”

  —ALEXANDER TURNEY STEWART, 1862

  At an estimated cost of nine million dollars a year, Stewart’s custom fees were higher than any other importer’s in New York City. Most ships carrying textiles from distant ports, destined for New York, could be counted on to be bringing over Stewart imports. The cost estimates of imports for his combined retail and wholesale businesses were approximately fifty million dollars yearly. According to one congressional report (1872), Stewart’s imports totaled about one-tenth of all imports arriving in the port of New York.

  Stewart’s domestic manufacturing enterprises made him the largest contractor for military uniforms and other accessories during the Civil War. His manufacturing concerns continued to produce a variety of garments and accessories for women, including cloaks, underwear, dresses, and fur wraps. His companies also produced housewares such as tablecloths, napkins, and sheets, as well as household items not readily available in other stores. Carpets and mattresses were another of his key product lines. At the time of his death in 1876, Stewart had begun work on constructing a carpet factory in New York that was to be the most sophisticated and largest carpet manufacturing enterprise in the country.

  “More than anyone else in America probably Alexander T. Stewart is the embodiment of business. He is emphatically a man of money—thinks money; makes money; lives money. Money is the aim of his existence, and now at sixty-five, he seems as anxious to increase his immense wealth as he was when he sought his fortune in this country forty years ago.”

  —JUNIUS HENRI BROWNE, The Great Metropolis, 1869

  According to Michael Klepper and Robert Gunther, authors of the 1996 book The Wealthy 100: From Benjamin Franklin to Bill Gates—A Ranking of the Richest Americans, Past and Present, A. T. Stewart ranked seventh among the top ten all-time wealthy Americans with an estimated fortune of $46.9 billion based on the country’s gross national product at the time compared with an equivalent fortune in today’s economy.

  Among the top ten are eight men who made their fortunes during the Gilded Age and two who did so in the retail business, Stewart and Marshall Field. With figures based on billions of dollars in the economy of 1996, the top ten are:

  John D. Rockefeller, $189.6 billion

  Andrew Carnegie, $100.5 billion

  Cornelius Vanderbilt, $95.9 billion

  John Jacob Astor, $78 billion

  Bill Gates, $61.7 billion

  Stephen Girard, $55.6 billion

  A. T. Stewart, $46.9 billion

  Frederick Weyerhaeuser, $43.2 billion

  Jay Gould, $42.1 billion

  Marshall Field, $40.7 billion

  A. T. Stewart could have become as grand a philanthropist as the other richest men in American history, but it was really not hi
s nature. He and his wife were childless, his children having died in infancy, and so he spent all of his time engaged in his business enterprises. He was not against giving to charity but instead preferred to make investments in enterprises that showed a profit as well as being of a public benefit. One example was his idea of building a hotel in New York City exclusively for working women. Although construction began with the best intentions, the hotel was not completed before Stewart died. When it finally opened, the idea of using it as a working women’s hotel was soon abandoned. It became instead an ordinary profit-making business.

  WORKING WOMEN’S HOTEL

  GRAND LEGACY FROM MR. STEWART

  The Splendid Building On Fourth-Avenue

  Nearly Ready To Be Opened—The

  Best Of Everything Within The Means

  Of Every Working Woman—Less Than

  $5 Per Week Expected To Pay For

  Board And Room—Full Descriptions

  Of The Purposes And Facilities

  The “Women’s Hotel” on the corner of Fourth-avenue and Thirty-second and Thirty-third streets, founded by the late Alexander T. Stewart, is now almost completed and will soon be formally opened by a grand reception. … There are 502 private rooms in the hotel. Of these 115 are double rooms. … The 387 single rooms are half the size of the double ones. All these rooms are furnished in the most comfortable and elaborate style. … The entire building is the model American hotel; the best constructed, the most elaborately furnished, the best appointed, and with the most perfect culinary department of any hotel in the world. Besides all this, the Women’s Hotel is by almost 200 rooms the largest in the Metropolis and it is intended to furnish women who earn their livelihood the best possible living for the least possible money. … Mr. Stewart, after much reflection upon the subject, concluded that all the necessaries and domestic luxuries of life were within the reach of even those who earned but small incomes. … The Women’s Hotel has cost to build and finish just $2,000,000.