Montgomery Ward & Company Warehouse and Store, Portland Oregon
The Montgomery Ward & Company, located at 2741 NW Vaughn, Portland, Multnomah County, Oregon is a nine-story-plus basement, reinforced concrete structure built between 1920 and 1936. The building was designed by W. H. McCaully of Montgomery Ward & Company, and is one of seven similar facilities built by the company around the United States. When constructed, the massive building, a landmark juxtaposed against the west hills of Northwest Portland, contained the greatest floor space of any building in Portland, and was claimed at the time to be one of the largest reinforced concrete buildings west of The Rockies.
The company, the nation's first mail-order merchandizer, established its first warehouse on the west coast in July, 1913, in Portland, to service customers in Oregon, Washington, Idaho, Nevada and California. After World War I, the company chose the city as a base to expand their business to Alaska, Hawaii, and Pacific rim countries. Initially constructed in 1920 for 1.5 million, the building was expanded in 1936 by 230,000 square feet, and in its heyday, employed 1000 employees.
Aaron Montgomery Ward was born in February, 1843 in Chatham, New Jersey. Several years later he moved with his parents to Miles, Michigan where his father established a cobblers shop. Aaron attended public school until the age of 14 when he became a cobblers apprentice. Disliking the work, he worked in a barrel factory and brick yard as a laborer until he obtained a position as a shoe clerk and decided on a career in retailing.
In 1862 he moved to St. Joseph, Michigan, clerking in a general store; in three years he was the store manager. Ambition caused him to move to Chicago in 1866, where he worked as a clerk in Marshall Fields dry goods store for two years, then became a traveling salesman for a dry goods wholesaler in St. Louis, Missouri.
Ward developed his idea for a mail order catalog business while visiting small towns in the rural midwest. He observed that the goods being sold in the general stores were limited in quality and variety and were usually expensive. Concluding that the system for distributing goods was outdated, he conceived the idea of consumers selecting goods from a catalog, then ordering from a centrally-located store which would buy in large wholesale lots, thus keeping prices reasonable.
Ignoring the criticism of his friends, who claimed no one would buy merchandise sight unseen, and anxious to test his theory, Ward returned to Chicago, working for a dry goods firm and stockpiling a variety of merchandise. He was ready to launch his business in 1871 but Lost his goods in the Chicago fire. Ward immediately began buying and storing merchandise and in August 1872, with two partners and $1600 in capital, he launched Montgomery Ward & Company from a small rented room in Chicago. His one-page catalog listed 163 items and was advertised primarily in farm periodicals. The first year of business was very slow, his partners gave up and Ward continued to support himself by working in a dry goods store. The slow start did not last long, however; in 1874 the company sold $100,000 worth of merchandise and issued its first bound catalog, 24 pages in length. His first big order came from the National Grange, which purchased stock from Ward for their cooperative retail stores. For many years, much of Montgomery Ward's business continued to come from farmers, especially those who were members of the grange movement. Whoever the customer, Ward's success and reputation were based on his concept of providing the customer with good service and a variety of good, quality merchandise at a low price. If the customer was satisfied and trust was established, repeat business followed, turning Montgomery Ward & Company into the largest mail order company in the nation. Montgomery Ward died in 1913 after which the company was controlled by Ward's partner, George R. Thorne and his five sons.
Montgomery Ward & Company in the west
Montgomery Ward & Company established its first warehouse on the west coast in July 1913 at N.W. 18th and Upshur in Portland. Prior to this, Montgomery Ward customers ordered from the Chicago store. The Portland warehouse serviced Oregon, Washington, Idaho, Nevada and California. The store featured only catalog sales; there were no retail sales and goods were shipped by rail to the town nearest the customer. In 1913 most of the customers were from rural areas. In fact, in 1913, the store manager stated, "We are not competitors of any firm now doing business in Portland. We do no retail business in Portland. Our patrons live outside the big cities."
After World War I, Montgomery Ward & Company announced (December 1919) plans to build a new warehouse to contain the merchandise for their ever-expanding business. The company issued one million shares of stock to raise the $1.5 million capital it estimated would be necessary for construction. Negotiating with the Ladd Estate and the Portland Railway Light and Power Company, the company purchased 8 acres formerly part of the Lewis & Clark Exposition grounds, between N.W. 27th and 29th and extending from Vaughn to Nicolai. At the time plans for the Montgomery Ward store were announced, only the Forestry Building remained on the Exposition site; the only other structures were tennis courts, a playground and part of an auto camp ground.
Prior to construction, management announced that in addition to the territory it was already serving, the new Portland warehouse would ship to Alaska and Hawaii and they intended to develop foreign trade with the Pacific rim countries. In a speech in December 1919, R. J. Thorne, President of Montgomery Ward, stated great confidence in the future growth of their west coast business. Comparing prospects in Portland with the great success experienced by Montgomery Ward in its Kansas City operations he said, "Portland offers the same class of thrifty, far-sighted customers."
Early newspaper reports estimated that 2,000 to 3,000 Portland residents would eventually be employed at the building. Amenities were to include a recreation park, athletic field, croquet and tennis courts, a running track and an open air-promenade. Employee benefits were to include doctor's and dentist's offices and a library, as well as a cafe. After one year of service, employees were to receive full medical and dental services, hospital care, home visitations by nurses, and, after five years, free life insurance. Not that these early projections were even fully realized: interviews with early employees confirm that a nurse was on duty. As for life insurance, home visitations, etc., these were not to be.
The new store opened in 1920. At that time, in a speech before the Portland Realty Board, A. C. Ackerman, Advertising Manager of Montgomery Ward Company, listed several reasons for the company's decision to build in Portland. Portland was centrally located on the west coast and could provide timely and cheap shipping rates. The city also had good shipping by water and by the major railroads as well as many interurban feeder lines. Another important feature was the stability of Portland's labor conditions, "this at a time when unrest has been very prevalent in all parts of the country." In September 1920, at the time of its completion in a record nine months, Montgomery Ward was, in terms of floor space, the largest building in the city.
Business in Portland had been good for Montgomery Ward between 1913 and 1919 and this encouraged the construction of the new Portland warehouse. Even then, however, Americans' shopping habits were beginning to change. The primary customers served between 1872 and 1920 had been those in isolated rural communities to whom Montgomery Ward offered the shop-by-mail alternative. From 1910 on, Americans were to become increasingly mobile due to the auto or, for that matter, the farm truck. Instead of waiting for merchandise to come to them, customers often would drive to the store, order from catalogs there, and even return if necessary to pick up the goods ordered. By 1936, Montgomery Ward was capitalizing on this auto traffic in yet another way: the store on Vaughn Street added a separate building for tire service, selling, mounting, and balancing new tires.
Another accommodation Montgomery Ward & Company made to the more mobile customer was construction in 1924 of N. W. Wardway Road, to the north of the building, so that customers from Linnton and beyond would have easier access to the store. In 1933, in addition to mail orders, the store made some limited retail service available to customers, completing a management change which had begun in 1927. Since the latter date, Montgomery Ward had opened approximately 500 small catalog chain stores across the U.S. which were serviced by main warehouse stores such as the one in Portland. In 1935 the company offered telephone order service to customers within a 15-mile radius of downtown Portland. Deliveries could be made by truck or parcel post, as well as freight.
Although the number of employees in 1920 was approximately 1,000, by November of 1932 this had dropped to 500 due to the effects of the Depression. Still, the Portland operation was promising enough, even in the depths of the Depression, for Montgomery Ward headquarters in Chicago to authorize and provide plans for adding 230,000 square feet to the original structure and for making provisions for 200 (soon raised to 300) new parking spaces.
In February 1936 Mayor Joseph Carson turned the first spadeful of earth for the new structure. By August 29, the new wing was open for use. Access had been provided for new retail spaces and merchandise. New men's and boy's sections and a shoe department were added, as well as a mezzanine floor for women's fashions. The 2nd and 3rd floors held household goods and furniture. On opening day 6,000 people visited the new store and the Mayor was presented with the 10 millionth catalog distributed from the Portland warehouse. In spite of World War I and the onset of the Depression, the first 23 years of Montgomery Ward's presence in Portland had provided substantial prosperity and growth for the company.
The years between 1936 and the end of World War II proved to be more difficult ones for the company. On November 20, 1936, just three months after the new wing opened, the National Labor Relations Board in Seattle received a complaint from employees at the Portland store. A branch of the International Longshoremen's Association had begun efforts to organize the store's 1600 workers and charged that intimidation and coercion of employees by the company had discouraged workers affiliation with the union. This initial charge was only the beginning of a lengthy and bitter struggle between labor and management at Montgomery Ward.
In February 1937, after 34 discharged employees filed a complaint, hearings were held and in May the NLRB ruled in favor of the workers. Montgomery Ward retaliated by filing a number of exceptions. The battle continued until November 1939 when a U.S. Circuit Court in Chicago found in favor of the unions and the NLRB.
On December 8, 1940, a strike was called as hundreds of Montgomery Ward employees walked off the job; picketing of the store began, and on May l, 1941, Montgomery Ward closed its store. Members of various railroad and truck unions had refused to cross picket lines to make deliveries and business had come to a standstill at 27th and Vaughn. The store, closed for almost three months, finally reopened on July 31, 1941 when the A. F. of L. retail clerks union accepted a wage proposal. The company rehired 1200 people and business resumed, but Montgomery Ward began lengthy appeal procedures, requesting that the NLRB orders be set aside.
When World War II was declared, the nation's labor-management problems of the Thirties were submerged by federal legislation mandating the mediation process. Such legislation was accepted, doubtless with grumbling about their prerogatives by all of the nation's large firms with one prominent exception: Montgomery Ward. The defiance, by Ward's Chairman Sewell Avery of War Labor Board directives culminated, on December 28, 1944, in the U.S. Army occupying seven Montgomery Ward plants across the nation (this included the Portland store). Sewell Avery was seen on page 1 of most American newspapers being carried out of his office by several soldiers. In essence, the order on which the soldiers acted stated that Montgomery Ward and Company was producing vital war material and, since the company had never settled its labor troubles or complied with War Labor Board mediation, the possibility existed that a strike might be called. The federal government could not afford to risk such a strike and the loss of goods necessary to wage the war, so the Army was to operate the stores. The Army's directive to Montgomery Ward's workers was announced in The Oregonian of January 3, 1945, alongside the photo of the retail department head of the Portland store, "one of the two store executives who were dismissed by the Army... for alleged failure to cooperate."
"Grim notice was given all employees of Montgomery Ward stores Tuesday afternoon by Major General Joseph W. Byron, war department representative in command of the army seizure of the company's stores in seven cities, that the army 'means business.' Text of his declaration follows:
'If you receive instructions from your superior to interfere in any way with the conduct of the business by the war department representative and you obey such order, remember that you as well as the person who gives the orders will be subject to severe penalties under the law. Cases of obstruction of our work will be reported promptly to the FBI and the department of justice for action. If you are of draft age, and it becomes necessary to discharge you from your job because you fail to support your government, your name will be turned over to selective service for reclassification. I hope it will not be necessary to invoke these penalties against anyone. I expect your support.'"
A settlement in the labor suit was not reached until July 1953, when Federal Judge James Fee awarded damages to Montgomery Ward from the delivery firms who had refused to cross picket lines in 1940. Montgomery Ward had requested $1,355,608 in actual damages and $1.5 million in punitive damages. However, Judge Fee only awarded the company $130,000.
Post World War II
After the turmoil of the late Depression and war years, the company continued its mail-order business, but management realized future growth would be in the retail area, with most customers coming from urban and new suburban areas. These consumers wanted to drive to a store, find convenient parking, enter and examine merchandise on display, pay with a credit card and take the purchase home with them.
The Vaughn Street store opened even more retail space and in 1947 constructed a 300,000 square foot warehouse at N.W. 35th and Yeon. It was not enough. For suburban shoppers, driving was no longer the novelty and adventure it had been in the 1920's-40's. Shopping malls, filled with local and national chain stores were being constructed in the suburbs of Portland and elsewhere. Montgomery Ward joined this trend in 1970 (Mall 205), 1972 (Jantzen Beach) and 1976 (Beaverton). Announcement of closure of the Vaughn Street store came in July, 1976; it was to continue only as a "catalog overstock outlet." Ironically, in 1978, a new 300,000-square-foot warehouse was constructed in the Rivergate area, to serve as a distribution center for Oregon, southwest Washington and parts of Alaska and Utah.
For the Montgomery Ward Company, business had undergone many changes since 1913 when they first established a store in Portland. Merchandise is now moved by men with forklifts instead of miles of conveyor belts to freight elevators. Inventory control is maintained by computers rather than by boys on roller skates. Montgomery Ward customers, once served by railroads and parcel post, now serve themselves. Shoppers who once purchased by catalog from a regional warehouse now choose their goods in person at a decentralized, suburban store. As Montgomery Wards continues to try to maintain Aaron Montgomery Ward's goal when he launched his business in 1872 to provide good quality merchandise at a reasonable price.
In 1955, investor Louis Wolfson waged a high-profile proxy fight to obtain control of the board of Montgomery Ward. The new board forced the resignation of Avery. This fight led to a state court decision that Illinois corporations were not entitled to stagger elections of board members.
In 1961, company president John Barr hired Robert Elton Brooker to lead Montgomery Ward as president in its turnaround. Brooker brought with him a number of key new management people, including Edward Donnell, former manager of Sears' Los Angeles stores. The new management team achieved the turnaround reducing the number of suppliers from 15,000 to 7,000 and the number of brands being carried dropped from 168 to 16. Ward's private brands were given 95 percent of the volume compared with 40 percent in 1960. The results of these changes were lower handling costs and higher quality standards. Buying was centralized but store operations were decentralized, under a new territory system modeled after Sears. In 1966, Ed Donnell was named company president. Brooker continued as chairman and chief executive officer until the mid 1970s. In 1968, Brooker helped engineer a friendly merger with Container Corporation of America; the new company was named MARCOR. In 1974, Mobil oil company bought MARCOR.
During the 1970s, the company continued to struggle. In 1973, its 102nd year in business, it purchased a small discount store chain, the Miami-based Jefferson Stores, renaming these locations Jefferson Ward. Mobil, flush with cash from the recent rise in oil prices, acquired Montgomery Ward in 1976. By 1980, Mobil realized that the Montgomery Ward stores were doing poorly in comparison to the Jefferson stores, and decided that high quality discount units, along the lines of Dayton Hudson Company's Target stores, would be the retailer's future. Within 18 months, management quintupled the size of the operation, now called Jefferson Ward, to more than 40 units in the Delaware Valley and Richmond metropolitan areas, and planned to convert one-third of Montgomery Ward's existing stores to the Jefferson Ward model. The burden of servicing the new stores fell to the tiny Jefferson staff, who were overwhelmed by the increased store count, had no experience in dealing with some of the product lines they now carried, and were unfamiliar with buying for northern markets. Almost immediately, Jefferson had turned from a small moneymaker into a large drain on profits. The company sold the chain's 18-store northern division to Bradlees, a division of Stop & Shop, in 1985. The remaining stores closed.
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 28, 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.