Part 9

I have before me a Macy advertisement from a New York newspaper of recent date. In a conspicuous place in it there is a card which says: "For sixty-two years we have sold dependable merchandise at lowest in the city prices. We are doing so now and shall continue to do so." This was published at a time when the recent reaction from the extremely high prices of the war period already had begun to set in; and yet this was the big store's sole acknowledgment of the deflation sentiment--to say nothing of hysteria--which was sweeping the town. Its competitors had been offering their wares at reductions of from twenty to fifty per cent. from their topmost prices, but, serene and secure in the knowledge that its policy in selling had been consistently adhered to, Macy's only reiterated that its prices would continue to be the lowest in the city--quality for quality.

To hold fast to this policy, through thick and thin, has not always been easy. Macy's has fought some royal battles in its behalf--yet not so much because it was a policy as because with the big store in Herald Square it has become a principle of the most fundamental sort.

More than twenty years ago the principle became extremely difficult to maintain, because of the growing tendency of the proprietors of articles, so patented or copyrighted as to make their imitation practically impossible, to attempt to fix their final retail sales price. It no longer became the mere question of whether Macy's or any other store would have the right to undersell its competitors; it became the fundamental question of whether the great centuries-old open market of the world could continue to remain an open market, in the interest of the consumer; and not a closed market, in the interest of the producer. To maintain the first of these positions, in behalf of its patrons, Macy's entered upon and won, almost single-handed, one of the notable legal battles in the history of this country.

As far back as 1901--if you are a stickler for exact dates--this whole question of price maintenance became an acute issue with Macy's. It came to pass that when the prominent publishers of America formed an association, one prime purpose of which was to fix the prices at which their books would sell at retail, the store quickly saw that if this trust agreement was permitted to stand unchallenged, its cardinal principle of underselling its competitors, would have to be sacrificed. Macy's did not propose to make such a sacrifice--to permit its customers to be sacrificed--without a protest. And such a protest it prepared to make.

Isidor Straus, then the head of the business, sat in the office of his friend and counsel, Edmond E. Wise, in a downtown office. Mr. Wise put the thing frankly and without equivocation before his client. He said that it would be a hard legal fight, no doubt of that, but that a great principle was at stake; the keen mind of the lawyer was convinced of the economic fallacy of the position of the publishers' association.

Quietly Mr. Straus told his attorney to go ahead. He said that he would fight the fight, to the last ditch. No expense was to be spared. The case would be carried, if necessary, in every instance to the highest court of appeal.

Accordingly, Mr. Wise prepared a suit against the American Publishers' Association which holds the record for appeal in the history of jurisprudence in this country. Three times it went up to the Court of Appeals of the State of New York; finally, after nine years of legal battle, it was carried to the United States Supreme Court, which, after due deliberation, decided every point in favor of R. H. Macy & Company.

That was in December, 1913. Early in the following May the firm had the satisfaction of having the publishers hand over a check on the Park National Bank for $140,000. This sum represented a settlement for the difficulties that Macy's had had to undergo for more than a dozen years past in getting stock for its book department. Ofttimes it was necessary to follow devious paths indeed to gain this end--and still hold fast to the fundamental underselling policy of the store. Sometimes the store had to go so far as to send to other retail stores to buy a certain volume, at the full retail price, and then resell it to its patrons, at its customary ten per cent. off the price of the store at which it had just purchased it. So much if you please for the expense of standing by a principle!

A short time after this signal victory of Macy's, certain large manufacturers of patented articles, who for a time had sustained in the lower courts their claim to a fixed retail price standard, sought definitely to control Macy retail prices upon their products. Macy's, however, defied them, and the Victor Talking Machine Company, one of the leading adherents of price maintenance, brought an action in the United States courts to compel Macy's adherence to the rules for resale at a certain price. Again there was a royal battle and again Macy's triumphed signally, for on final appeal, the United States Supreme Court again decided in favor of the store in Herald Square, on every one of its contentions. Macy's then retaliated and brought suit against the Victor Company, under the Sherman Law. In a bitterly contested action, which culminated in one of the longest trials before a jury on record--consuming more than ten weeks--Macy's recovered a judgment of $150,000, and a counsel fee of $35,000; after which no paths apparently were left open to the manufacturers who sought to maintain the retail prices that suited them best. Court decisions seemingly blocked all possible pathways.

One path did remain, however--legislation. Effort was made to pass a measure down at Washington to permit and sustain retail price maintenance, which in reality meant the emasculation of the Supreme Court's decisions. When that measure came to a hearing before the Interstate Commerce Committee of the House one of the Macy partners, accompanied by Mr. Wise, the store's counsel, and Mr. E. A. Filene, the well-known Boston merchant, came before it in opposition. Up almost to that hour, Macy's had gone it alone. Now the attention of the country was focussed upon its fight and the National Retail Dry Goods Association came in with both its sympathy and its active co-operation--hence the appearance of Mr. Filene, who made a most excellent argument in support of the Macy contention.

It was shown definitely to the members of this House committee that many, if not all, branded and patented articles took a retail profit of from fifty to seventy-five per cent. The member of the Macy firm took a watch nationally advertised at $2.50 and duplicated it with a watch which his store sold at sixty-five cents, going so far as to take the two watches apart so as to show conclusively that the one was quite as good as the other. Certain other commodities went under similarly critical analyses. When the hearing was completed, the committee laughed the bill out of court. Since then the question of price maintenance by the original producer has been permitted to drop. Macy's had won its hard-fought fight; won it cleanly and honestly. By performance it had made good its statements that it proposed wherever it was humanly possible to undersell its competitors. That was no idle phrase.

It is indeed one thing to make a statement--whether in print or by word of mouth--and another and ofttimes a far more difficult thing to make good that statement by performance. No one knows this better than Macy's. Having set down such a definite and distinct statement it must be prepared to make good. It must be so covered and protected at every possible point that if challenged it can give a good account of itself. In fact, challenges come in every day--they have been coming in every day for a good many years now--and the house continues to make good its statement willingly--even joyfully. Here it is, then, that the comparison department functions; here it is that the original fundamental policy of Rowland H. Macy--to buy and sell only for cash--strictly adhered to during the sixty-four years' life of the business--makes it possible for the house to make good.

How, then, is it done?

The answer is easy.

Suppose, if you will, that Smith, Brown & Jones are having a special sale of Mother Hubbard wrappers. There are advertised as their regular $4.97 stock, marked down (at a heartbreaking sacrifice) to $3.79. Manifestly, it is up to R. H. Macy & Company to sell the same quality of Mother Hubbard for less than $3.79, if they are to live up to their oft-stated policy. It is quite as patent that Macy's must know just what kind of wrappers Smith, Brown & Jones are selling, if it is to compete on an exact basis. Nothing simpler. One of the Macy staff of shoppers is hurried forthwith to the scene of the bargain and, purchasing one of the garments, brings it back post-haste to the Macy comparison department. Furthermore, it is in this department by ten o'clock of the morning of the sale. It is then matched as closely as possible with a Mother Hubbard from the Macy stock, and the two garments compared, point by point. If, after careful examination, it is found that Macy's is charging more, or even the same price, for equal quality, then its prices are immediately marked down to a figure at least six per cent. lower than that advertised by the other store. And this, mind you, is not an exceptional performance but a daily procedure in the carrying out of which an exceptionally alert woman manager and twenty expert shoppers are constantly kept busy.

If you make inquiry regarding the ins and outs of this remarkable policy you will find that it is far broader than you may have imagined. Here, again, is proof of the pudding. It is a typical letter, received from a customer and copied verbatim, with only the name left out:

November 12, 1920.

R. H. Macy & Co., New York City.

Dear Sirs:

I purchased a banjo clock at $13.89 from you on Tuesday. Yesterday I saw the same clock, with same works, etc., identical in every way, at ----'s, for $11.25. Now, inasmuch as you claim that you sell goods at the very lowest figure, I think that is too much difference in price to overlook. I trust that I shall receive your check for the difference in the amount, otherwise please call for the clock at once. I purchased clock in the basement.

Yours very truly,

This letter was received by the store and acknowledged that very day. It then was turned over to the comparison department, from which a shopper was despatched to the store at which the customer claimed to have seen the clock for less money. The shopper reported that the claim was correct, and a check was immediately forwarded to the customer for the difference between the price which she paid for the clock and six per cent. less than the other store's price for it. Nor did the matter end there. All this kind of clocks in the basement were at once repriced to conform to the adjustment made with the customer.

There are, too, the occasional tests made by customers who, while they are not dissatisfied, cannot believe that the low-price policy can be consistently carried out. As an example, this half-jocular letter:

November 15, 1920.

R. H. Macy & Company, Broadway & 34th Street, New York.

Gentlemen:

Lest you regard this as a complaint from an ordinary .22 calibre chronic kicker let me say in the first place that I merely want to see to what extent you will make good on your brazen claim to sell goods at a lower price than other stores. Now then:

On November 10th, I purchased a toy "cash register" bank in your toy department for $1.98. (I want the kid to learn frugality better than I did.) On November 14th my wife saw the same toy at Hahne's in Newark, N. J., for exactly the same price. So far, so good. It was worth it. But, Mr. Macy, you said your prices were _less_.

Besides, I have an account at Hahne's. By the time I would have needed to pay for that bank there would have been enough in it to settle the bill.

Here is your chance, but I'm from Missouri.

Yours,

The answer to this complaint was prompt and to the point. It reads:

R. H. MACY & CO. HERALD SQUARE, NEW YORK

December 4, 1920.

Mr. ------ ------ ------

Dear Sir:

We acknowledge your letter of November 24th, with regard to a toy-bank, which you purchased from us for $1.98. We have investigated your complaint and find, as you state, Hahne & Co. in Newark are selling this article at the same price at which you purchased it from us. Our price on these banks is now $1.89, in keeping with our claim that we sell dependable merchandise for "lowest-in-the-city" prices.

We appreciate your courtesy in calling this matter to our attention and also for the opportunity to demonstrate the upholding of our policy. A refund of nine cents in stamps is enclosed.

Yours very truly, (Signed) R. H. MACY & CO.

Mgr. Bureau of Mail Order and Adjustment.

Of course this complaint was trivial, the sum involved small, and Macy's must quickly have realized that the man who wrote the letter was not particularly serious. Yet that made no difference. The matter was adjusted; even though the process of adjustment involved a shopper's trip to Newark and considerable clerical work--in all several times the cost of the tiny bank. Yet the matter _was_ adjusted and all the toy-banks of that kind were at once reduced in price, to say nothing of a satisfied patron made for the store.

There is another sort of complaint that, at times, keeps the comparison department pretty busy. Women frequently will stop at a counter in the store, examine an article and then exclaim:

"Hm-m--$6.74 for that! Why, I saw the same thing today at Jinx, Bobb & Company's for $5.90."

A mere passing comment which, in the old days of merchandising, might easily have been ignored. In Macy's it is not ignored. The clerk who hears this remark makes a note of it and sends through to the comparison department what is technically known as a customer's complaint. Immediate investigation is made, the prices checked up, and, if the casual shopper is right, Macy's prices are at once readjusted to the six per cent. below the competitor's charges. It has been found, however, that nearly ninety per cent. of this sort of complaints are incorrect. Two articles, in separate stores, may look so nearly alike that a casual inspection will not reveal any difference, and, therefore, competing goods must often be subjected to expert examination and even to analysis. A magnifying glass is used to count the threads in a fabric; woolens are boiled in chemical solutions to determine whether there is any adulteration; and cotton goods, such as sheets and pillow cases, are weighed, washed and weighed again to ascertain to what extent they are loaded. For Macy's is just to itself, as well as to the public.

As has been indicated already, there are some things that the store as a matter of policy does not sell--pianos, chief of all. But that does not mean that there is, in the minds of its managers, the slightest excuse for its shelves not holding the things that it ought to sell. A large difference, this, and one which is constantly being checked by members of the shopping staff of the comparison department--going through its floors and inquiring in the various departments for goods for which there is little ordinary demand, and so a considerable likelihood of their not being found in stock. If an article requested is not found in stock, the shopper immediately buys something else--so as to get the number of the salesclerk. Then a report is made to the department buyer in order that he may see whether or not the clerk has followed up the inquiry.

Incidentally, the shopper's report upon this entire transaction takes into account all the details regarding the manner in which the sales are handled and even notes the speed with which the parcel is wrapped and the change returned. It is not a spying system, but part of the store's honest effort to keep its efficiency at the highest notch. Naturally the shoppers of its comparison department are not known as such to its salesforce--for this reason the personnel of the corps must be under constant change--and it is equally evident that their anonymity is carefully preserved in their dealings with other stores. They are all well-bred young women, ranging in type from the flapper to the matron, and each is so carefully trained to act her part that it is quite impossible to distinguish them from the store's bona fide shoppers.

Another of their duties is to report upon the speed of Macy deliveries. Once a month, at a certain prearranged time of day, a similar purchase is made at each of the largest stores in the city, including Macy's. These are all ordered sent to the same address and a record is made of the length of time it takes each to arrive. In the report that is finally made of the test details are included showing the manner in which all the packages are wrapped in order that Macy service may at all times be held up at least to the standard of its competitors.

In the highly scientific machine of modern business, the test is as valuable as in other machines. I have stood in a great sugar refinery and watched the workmen from time to time draw off tiny phials of the sweetish fluid in order that they might show under laboratory examination that the machine was functioning at its highest point. And so are the tiny phials of Macy service drawn from the machine. If they show that, even in the slightest degree, the great machine of retail merchandising is functioning below its highest efficiency, it becomes the immediate business of the management to correct the loss.

"I tell my people not to come to me with reports that everything is going well," says its general manager, "I only want to know when things begin to slip. Then it is my job to set them straight once again."

One thing more, before we are quite done with this sketch of the organization of a great merchandising institution. It is, in this case, a most important thing:

With the credit system in force in nearly, if not quite, every other large store in the New York metropolitan district, Macy's for years has had to encounter a considerable sentiment against its policy of doing a cash business only. For there always has been a desirable class of trade represented by customers who, for one reason or another, find it most inconvenient to pay their bills monthly--people whose means and credit are unimpeachable. At one time it looked as if R. H. Macy & Company would either have to forego their custom or else make exceptions to their long established rule. The former they could do; the latter they would not. But--

Out of this very need for furnishing customers with the convenience of some sort of a charge account grew a great Macy specialty--the depositors' account department which, while making no concessions to the store's rock-ribbed principle of selling for cash, solved a very great problem in its touch with its public. It turned the costly credit privilege into an asset both for the customer and for the store. The very thought was revolutionary! What, ask a customer to pay in advance; to have money on deposit with R. H. Macy & Company, private bankers, to pay for normal purchases for a whole thirty days to come! It couldn't be done. New York would never, never stand for it. Every one outside of the store was sure that it never could be done. And a good many inside, as well. Yet the thing deemed impossible has come to pass. The idea was sound. The plan today is successful, even beyond the dreams of its promoters. With fifteen thousand depositors, its total deposits--money placed into the store to be drawn against solely for merchandise purchases--have reached as high as $2,750,000 at a single time.

Interest at four per cent. annually is paid upon these deposits, so that the customer's money does not lie idle in the Macy till. Moreover, the money may be withdrawn at any time, and without previous notice being given. Further than this, it has been a custom--not, however, to be considered invariable--to pay a bonus of two per cent. on net sales charged to the depositors' account department throughout the year. Compare the thrill of receiving a bonus check from your department-store, instead of a bill for dead horses!

It has been estimated that in some of New York's most representative and most elegant department-stores something like eighty-five per cent. of all retail transactions are upon the credit accounts. Assuming even that all of these accounts are promptly collectible--or collectible at all--the expense of the machinery of their collection becomes no small item in store management cost. This item Macy's saves--entirely and completely. And so, to no small extent, the store justifies itself in that other rigid rule--the pricing of its merchandise at a uniform rating of six per cent. less than that of its competitors. Upon this thought, alone, a whole book might be written.

III. Buying to Sell

Up the broad valley of the Euphrates a caravan comes toiling upon its way. It is fearfully hot; frightfully dusty. For it has come to mid-September; the rains are long weeks gone; and with the crops harvested, even the sails of the great mills that pump the irrigation canals full are stilled. The time of great heat and of little work. But still the caravan--the long, attenuated file of horses and camels must press on.

Ahead is Bagdad, that self-same ancient Bagdad which three thousand years ago was the commercial capital of the world. Through the heat waves and the blinding dust, the trained eyes of the Moslem can see the sun touching the gilded minarets and towers of her great mosques. Bagdad ahead. And at Bagdad the market-places which have stood unchanged for tens of centuries. Save that in recent years there have come to them these Americans--these shrewd agents of a little known folk, these rug-buyers of a far-away land of which they spin such fascinating tales. Tales far too fascinating ever to be believable. Yet Allah keeps his own accounting.

In the foyer of a lovely new home in newest New York a Persian rug is being spread for the first time. Its owner dilates with pride upon his purchase; shows those roundabout him the symbolism of its rarely delicate design; even to the tiny fault purposely woven into the creation by its maker to show in his humble fashion that only Allah may be faultless.

A great French city; this Lyons, by the bank of the lovely Rhone. For two centuries or even more its tireless looms have spun the rarest silk fabrics of the world. Nearby there is a little French village. Were I to put its name upon these pages, it would mean nothing to you. Yet out from it there comes a lace, so rare, so delicate, that one well may marvel at the human patience and the human ingenuity that conceived it. The silk comes to America, straight to the chief city of the Americas; so do the laces; and so in a short time will come once again the wondrous cotton weaves of Lille and of Cambrai--and will come as a tragic reminder of the five fearful years that were.

In the hot depths of a South African mine, negroes, stripped to their very waists, are toiling to bring forth the rarest precious stones that the world has ever known. In the fearfully cold blasts of the far North, facing monotonous glaring miles of lonely ice and snow, trappers are after the seal and the mink. Why? In order that milady, of New York, may sweep into her red-lined box at the Opera, a queen in dress, as well as in looks and in poise.