Montgomery Ward, and Company

Aaron Montgomery Ward was born February 17th, 1843, in Chatham, N.J., to Sylvester A. and Julia G. Ward. A few years later, the Wards moved to Niles, Michigan, where Sylvester set up a cobbler shop. Despite his family's modest circumstances, young Ward attended public school long enough to obtain a fairly good basic education. In 1857 he went to work as a cobbler's apprentice but disliked this trade and soon began to seek opportunities in other fields. After brief stints as a laborer in a barrel factory and a brickyard, Ward obtained employment in a shoe store and soon decided he wanted a career in retailing.

In 1862 Ward moved to St. Joseph, Michigan, where he worked as a clerk in a general store. Within 3 years he was store manager, and his salary had risen from $5 to $100 per month. Extremely ambitious, Ward gave up this position in 1866 and went to Chicago to seek his fortune. For 2 years, he was a $12 a week clerk for the wholesale dry goods firm headed by Marshall Field before obtaining a position as a traveling salesman for Walter M. Smith and Company, a St. Louis dry goods wholesaler.

During his travels in the Nation's hinterlands, Ward, according to biographer Edward A. Duddy, "obtained an intimate knowledge of rural conditions which enabled him to make a distinctive contribution to American life." In visiting general stores he noticed the high markup on many items, the poor condition of much of the merchandise, the limited selection of goods, and the sullen discontent of many of the customers. Blaming this situation on what he considered an antiquated distribution system, Ward conceived the idea of a large store in a central location which would buy goods in large quantities direct from manufacturers for cash and then sell them by mail to consumers for cash. Most of Ward's friends ridiculed the idea of a mail order store, arguing that people would not purchase merchandise sight unseen, but he refused to abandon his idea.

In order to put his theory into practice, Ward returned to Chicago, went to work for S. W. Pardridge Company, a State Street dry goods firm, and gradually accumulated a variety of merchandise. By 1871, he felt ready to launch his venture, but the Chicago Fire of that year completely destroyed his small stock of goods. Undaunted by this setback, Ward again began to accumulate merchandise.

Finally, in August 1872 Ward, with $1,600 in capital and two fellow employees from the Pardridge Company as partners, launched Montgomery Ward and Company from a small rented room on North Clark Street. His first catalog consisted of one page and listed 163 items ranging from cotton cloth to ostrich plumes. To obtain orders, he advertised chiefly in farm periodicals, and in the firm's early months of operation, public response was far from overwhelming. His two partners soon abandoned the venture, and Ward managed to keep it afloat only because he had kept his old job with the Pardridge Company. In 1873 the Company received a needed infusion of capital when George R. Thorne, Ward's brother-in-law, became a partner.

In 1874 Montgomery Ward and Company established itself. Sales that year reached $100,000, the first bound catalog, a 24-page tome, appeared, and Ward felt confident enough to leave Pardridge to devote full time to his own company's affairs. Two years later, sales passed the $300,000 mark and by 1887 reached $1 million. This "expansion was due," says Latham, to a large trade built up through orders from Granges and farmer's clubs. For many years, the firm identified itself as "the Original Grange Supply House," something of a misnomer since it was only one of several firms with which that organization dealt. Ward, however, won praise for his firm in Grange publications by agreeing to act as a purchasing agent for the organization's co-op stores and for attempting to market farmer's grain for a 1¢ a bushel commission, all of which contributed to increased catalog sales. Ward was also responsible for a drop in local retail prices. In fact, shortly after the company was founded, says Nevins, it "was boasting--and justly--that it had saved the consumer millions merely by forcing local dealers to sell their wares at fair prices."

Ward saw the farmer as a second-class citizen when it came to commerce. He believed the farmer should have every opportunity to purchase everything the city dweller could and be assured of quality as well. An admiring biographer explained Ward's vision: "Aaron Ward saw himself and the firm of Montgomery Ward not as a salesman or selling organization but as servants of farmers. The job was not to sell so much as to find out what was needed....The idea was to educate the farmer to the latest improvements …" (Hoge, First One Hundred Years, p. 15).

Gaining the farmer's trust was all-important, since sending money to a merchant one could not see required an act of faith. Many were already skeptical of peddlers and merchants who promised one thing but delivered quite another. Ward was fortunate in making an alliance with the National Grange organization of farmers whose membership totaled almost a million in the 1870s. As one of their precepts, the Grangers called for the elimination of the middleman wherever possible. Ward saw the organization as a natural ally and was able to receive their endorsement. He spoke often at Grange meetings and explained the concept of his catalog sales. He became the purchasing agent for the Illinois Grange and the company thereafter referred to itself as "The Original Grange Supply House."

Even after the company was a success, Ward and his partner George Thorne took pains to maintain a personal relationship with their farmer customers. Many of them would write to the firm, asking for advice or assistance, for the name of a good lawyer, or to propose to one of the models illustrated in the "Big Book." Their letters would be answered, often in a way that would help promote further sales. One farmer asked to be sent "a good wife. She must be a good housekeeper and able to do all household duty." (Quoted in Boorstin, The Americans, p. 124) The farmer was advised not to select a wife through mail-order, but "after you get the wife and you find that she needs some wearing apparel or household goods, we feel sure we could serve both you and her to good advantage." Another man wrote that he hadn't ordered anything for a while because he had been kicked by a cow, his wife had been sick, and the couple had just had a new baby boy. The letter was answered: "Condolences on the broken arm, congratulations on the baby, and had the farmer noticed the anti-cow-kicking device advertised in the catalog?"

Ward's business was already a big success when another entrepreneur, Richard Warren Sears, entered the business. While Ward had built a reputation on quality and a good price, Sears pitched his appeal to the less affluent farmers and offered them merchandise at rock-bottom prices. Moving from Minnesota to Chicago in 1887 he became partners with a young watchmaker named Alvah Curtis Roebuck. Originally selling only watches through the mail, by the early 1890s, they were offering a huge variety of merchandise. More aggressive and less conservative than Wards, the new business quickly grew to rival the older company. By 1907 it had annual sales of more than fifty-three million dollars. Yet even as it grew, Sears also took pains to maintain a personal relationship with its customers, answering their many letters with hand-written responses.

While the two firms competed aggressively, the early years of the twentieth century provided enough opportunities in mail-order merchandising to allow them both to thrive. The two companies dominated the field, and their catalogs became a staple in American culture. Daniel Boorstin has noted:

Essential to the explosion of the mail-order business in the early twentieth century was the dramatic improvement of mail delivery to rural patrons. Since 1863, people living in urban areas could receive their mail directly at their home address. But few towns were large enough to qualify for the service. In 1887 the population of a town must have reached 10,000 people in order to have free home delivery. At that time seventy-five percent of the American population had to retrieve their mail at the post office. Interestingly, the local postmaster often combined that occupation with that of merchant, so that there was often a divided loyalty in terms of the promotion of free home delivery. Farmers going to town to pick up their mail would buy supplies at the same time. Understandably these rural postmasters were not inclined to support free home delivery and the fight for extending the service was a long one. The National Grange officially endorsed the concept in 1891 and rural reformers such as Tom Watson of Georgia made it a rallying cry. In 1898 the Post Office provided for a program that would allow groups of farmers to petition their congressman for the service, and by 1906 an infrastructure of routes and agents was in place.

According to Daniel Boorstin, "This was the least heralded and in some ways the most important communications revolution in American history. Now for the first time it was normal for every person in the United States to be accessible by cheap public communication. For the rural American (more than half the nation's population by the census of 1910), the change was crucial. Now he was lifted out of the narrow community of those he saw and knew, and put in continual touch with a larger world of persons and events and things read about but unheard and unseen. RFD (rural free delivery) made these everywhere communities possible." (p. 132-133)

Another innovation that spurred the growth of catalog sales was the introduction of parcel post. Before 1913, the maximum weight for a package shipped through the U.S. mail was four pounds. If a package weighed more than that it had to be shipped through the more expensive express companies such as Wells, Fargo and American Express, or it had to be divided up into smaller packages. The introduction of U.S. parcel post in that year allowed large packages to be sent cheaply and resulted in an explosion of packages going through the mail, with three hundred million sent during the first year after enactment. While ostensibly the argument for parcel post was to enable the farmer to better send his crops to the city, the real impact was in reverse, with the farmers receiving more and more goods from the city. Montgomery Wards and Sears Roebuck were the beneficiaries of these developments. In the initial year of parcel post, Sears' sales increased 500% and Wards experienced a boost almost as great. Over the next decade, mail-order sales increased steadily with a high point reached in 1926. In that year Wards had 8,500,000 catalog customers.

Montgomery Ward and Company continued to grow even after the Granger movement began to decline, and was by far the largest mail order firm in the country. The secret of Ward's success, says Boorstin, "was not a secret at all, but simply to be honest, give good value and always let the customer be the judge." This formula not only made Ward a wealthy man, but it set a standard for the mail order industry which other companies found it necessary to emulate in order to compete and, in the final analysis, established the consumer trust which made a large-scale mail-order industry possible.

After 1900 Montgomery Ward and Company was surpassed by Sears, Roebuck and Company as the Nation's largest mail-order firm largely due to the great promotional and advertising ability of its principal founder Richard Warren Sears. By this time, however, Ward had almost completely withdrawn from active management. In 1893 he sold a controlling interest to his partner George R. Thorne, whose five sons were actually running the company by the turn of the century. After 1903, Ward stopped attending board meetings but retained the title of president until his death in 1913. His consuming passion in his final years was a crusade to save Chicago's lakefront from commercial encroachment. As a result of his lengthy legal battles, development was stymied, and what is now Grant Park was preserved for future generations.

In the years following Ward's death, the company he founded remained second to Sears in catalog sales and generally followed that company in adopting new selling techniques and in branching out into the retail store field. In 1920 Ward's nephews, the five Thorne brothers, lost control of the company, thus severing the company's last link to its founder. By the 1970s, a subsidiary of the Mobil Oil Corporation, Montgomery Ward and Company served over 30 million customers in its 2,100 outlets and sells almost $5 billion in merchandise yearly. Despite the changes that the firm has undergone, however, its impact on the mail-order business remains a major chapter in the history of retailing in America.

In 1985, the company closed its catalog business after 113 years and began an aggressive policy of renovating its remaining stores. It restructured many of the store layouts in the downtown areas of larger cities and affluent neighborhoods into boutique-like specialty stores, as these were drawing business from traditional department stores. In 1988, the company management undertook a successful $3.8 billion leveraged buyout, making Montgomery Ward a privately held company.

By the 1990s even its rivals began to lose ground to low-price competition from the likes of Target and Walmart, which eroded even more of Montgomery Ward's traditional customer base. In 1997, it filed for Chapter 11 bankruptcy, emerging from protection by the United States Bankruptcy Court for the Northern District of Illinois in August 1999 as a wholly owned subsidiary of GE Capital, which was by then its largest shareholder. As part of a last-ditch effort to remain competitive, the company closed over 100 retail locations in 30 U.S. states, abandoned the specialty store strategy, rebranded the chain as simply Wards, and spent millions of dollars to renovate its remaining outlets to be flashier and more consumer-friendly. GE Capital reneged on promises of further financial support of Montgomery Ward's restructuring plans.

On December 28th, 2000, after lower-than-expected sales during the Christmas season, the company announced it would cease operating, close its remaining 250 retail outlets, and lay off its 37,000 employees.