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Market Entry and Economic Adaptation: Spiegel's First Decade in Mail Order

Published online by Cambridge University Press:  24 July 2012

Orange A. Smalley
Orange A. Smalley
Affiliation:
Professor and Chairman, Department of Marketing, School of Business Administration at Loyola University
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Abstract

The Spiegel venture into mail-order installment credit marketing is examined here in detail to illustrate application of the tools of economic analysis to a specific historical situation. Whether through chance or intuition, the innovator in this example, though lacking virtually all the pertinent data, made precisely the adaptation that hindsight analysis discloses to have been most likely to succeed.

Type
Research Article
Information
Business History Review , Volume 35 , Issue 3 , Autumn 1961 , pp. 372 - 401
Copyright
Copyright © The President and Fellows of Harvard College 1961

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References

1 A notable exception has been the A & P Company. See, for example, Dirlam, Joel B. and Kahn, Alfred E., “Antitrust Law and the Big Buyer: Another Look at the A & P Case,” Journal of Political Economy, vol. 60 (April, 1952), pp. 118–132CrossRefGoogle Scholar.

2 Alchian, Armen A., “Uncertainty, Evolution, and Economic Theory,” Journal of Political Economy, vol. 58 (June, 1950), pp. 211–221CrossRefGoogle Scholar. Heflebower, R. B., “Toward a Theory of Industrial Markets and Prices,” American Economic Review (Papers and Proceedings), vol. 44 (May, 1954), pp. 121–139Google Scholar.

3 Company records, Spiegel, Inc.

4 Ibid.

5 Barger, Harold, Distributions' Place in the American Economy Since 1869 (Princeton, 1955), pp. 148–149Google Scholar.

6 Nystrom, Paul H., The Economics of Retailing (3d ed.; New York, 1930), p. 80Google Scholar.

7 Barger, Distributions' Place Since 1869, pp. 148-149.

8 Nystrom, Economics of Retailing, pp. 216-224.

9 Ibid., p. 91, passim.

10 See Buck, Solon J., Harvard Historical Studies, vol. XIX: The Granger Movement (Cambridge, 1913), pp. 16Google Scholar ff.; Shannon, Fred A., The Farmer's Last Frontier (New York, 1945Google Scholar); and Emmet, Boris and Jeuck, John E., Catalogues and Counters (Chicago, 1950), pp. 19–20Google Scholar.

11 Clark, Thomas D., Pills, Petticoats and Plows (Indianapolis, 1944), pp. 316–317Google Scholar. See also, Emmet and Jeuck, Catalogues and Counters, pp. 16-18.

12 Clark, Pills and Plows, pp. 316-317.

13 Nystrom, Economics of Retailing, p. 175; Emmet and Jeuck, Catalogues and Counters, p. 19.

14 In 1873 use of the one-cent postal card was permitted, followed a decade later by the two-cent first-class letter rate (Nystrom, Economics of Retailing, p. 194). Legislation enacted in 1879 classified mail-order publications, including catalogues, as “aids in the dissemination of knowledge,” which permitted promotional pieces to be mailed at the third-class rate of one cent per pound (Emmet and Jeuck, Catalogues and Counters, p. 13). A system of rural free delivery was adopted in 1896 which was “of incalculable value to the mail-order business” mitigating the physical isolation of farmers, “an isolation that must be given an important weight in accounting for the farmer's eagerness to make literature of the huckstering cries of the mail-order catalogues” (Emmet and Jeuck, Catalogues and Counters, p. 14). Finally, in 1912, the Parcel Post Act opened new opportunities for the mail-order companies by reducing the fourth-class rates on packages weighing over four ounces. The initial combined length-and-girth limitations of 72 inches and weight restriction of 11 pounds were liberalized during the next two years, and the big companies easily overcame the zone system, inserted in the bill by anti-mail-order interests as a restraining device, by establishing geographically dispersed shipping and distribution points (Emmet and Jeuck, Catalogues and Counters, pp. 187-190; Nystrom, Economics of Retailing, p. 194).

15 Barger, Distributions' Place Since 1869, p. 148.

16 Ibid.; Nystrom, Economics of Retailing, p. 178; Emmet and Jeuck, Catalogues and Counters, pp. 172, 204.

17 Nystrom, Economics of Retailing, pp. 185-186.

18 Ibid., p. 187; Emmet and Jeuck, Catalogues and Counters, p. 22; Pierce, Bessie Louise, A History of Chicago, vol. III, The Rise of A Modern City, 1871-1893 (New York, 1957), p. 182Google Scholar.

19 Nystrom, Economics of Retailing, p. 191.

20 Emmet and Jeuck, Catalogues and Counters, p. 79.

21 Cohn, David L., The Good Old Days (New York, 1940), pp. 505Google Scholar ff.

22 Emmet and Jeuck, Catalogues and Counters, pp. 161-162; Spiegel, May, Stern Company, Consolidated Catalog, Fall, 1907.

23 Emmet and Jeuck, Catalogues and Counters, p. 151.

24 Ibid., pp. 20, 35.

25 Barger, Distributions' Place Since 1869, p. 92.

26 Emmet and Jeuck, Catalogues and Counters, p. 175.

27 Ibid., pp. 172, 294.

28 Nystrom, Economics of Retailing, p. 187; Emmet and Jeuck, Catalogues and Counters, p. 175.

29 Ibid., p. 174.

30 Nystrom, Economics of Retailing, p. 185; M. J. Spiegel, chairman of the board, Spiegel, Inc.

31 Emmet and Jeuck, Catalogues and Counters, p. 74; Robert Engleman, vice president, Spiegel, Inc.

32 Emmet and Jeuck, Catalogues and Counters, p. 74.

33 Cohn, The Good Old Days, pp. 519-520; Nystrom, Economics of Retailing, p. 81; Cox, Reavis, The Economics of Instalment Buying (New York, 1948), pp. 62–63Google Scholar.

34 Cohn, The Good Old Days, p. 519.

35 Emmet and Jeuck, Catalogues and Counters, pp. 266, 301.

36 Ibid., pp. 267-268.

37 Arthur H. Spiegel to Mssrs. Ladenburg, Thalman & Company, Nov. 18, 1913.

38 For the general statement advanced by Alchian see the Journal of Political Economy, vol. 58 (June, 1950), p. 218Google Scholar.

39 The Furniture Catalogue, Spring, 1906 (Spiegel House Furnishings Co.).

40 Spiegel, Inc., company records.

41 Spiegel, May, Stern Company Charter (Chapter 24, West Virginia Code, 1924); A. H. Spiegel to Messrs. Ladenburg, Thalman & Co., Nov. 18, 1913; Memorandum signed by Carl Meyer, of Mayer, Meyer, Austrian & Platt, the company attorneys, dated Dec. 13, 1906.

42 From financial data for the Spiegel House Furnishings Company and Spiegel, May, Stern, reconstructed from old records in the Spiegel archive.

43 Corporate Minute Book, 1908-1909, Spiegel records.

44 Thornton Adams, interviewed by the author in 1957.

45 Frederick W. Spiegel, vice president, Spiegel, Inc., 1957.

46 September Sales Book, Spiegel, May, Stern Company, 1918. Also, interviews with Edward L. Swikard (1956), and H. George Meinig, a former executive of Spiegel, Inc., 1957, 1960.

47 Consolidated Catalog, Spiegel, May, Stern Company, Fall, 1907.

48 Furniture Catalog, Spiegel, May, Stern Co., Spring, 1907.

49 Second Follow-up on the Furniture Catalog, Spiegel, May, Stern Co., Spring, 1913.

50 Sundry credit letters issued in 1908-1910. Company records, Spiegel, Inc.

51 Furniture Catalog, Spiegel, May, Stern Co., Fall, 1908.

52 Spring Sale Book, Spiegel, May, Stern Co., 1909.

53 This impression was obtained from interviews with Edward L. Swikard, H. George Meinig, and Modie J. Spiegel.

54 House Furnishings Catalog, Spiegel, May, Stern Co., Spring, 1911.

55 House Furnishings Catalog, Spiegel, May, Stern Co., Fall, 1913.

56 Spiegel, Inc., company financial records; for Sears and Ward see Emmet and Jeuck, Catalogues and Counters, pp. 172, 294, 301.

57 Spiegel, Inc., company records.

58 Emmet and Jeuck, Catalogues and Counters, pp. 172, 301; Nystrom, Economics of Retailing, p. 179; Barger, Distributions' Place Since 1869, p. 148; Spiegel, Inc., company records.