Chainsters' Tussle

Signed by Pennsylvania's Governor George Earle in Harrisburg last week was another chain-store tax bill. It was not of the Louisiana variety, in which the graduated levy is calculated not on the number of stores within the State but on the total number of units in the system (TIME, May 31). But the Pennsylvania tax will be even harder on the chains than the Louisiana levy, because Pennsylvania is a more important chain-store State. Great Atlantic & Pacific Tea Co., for instance, has 2,100 stores in Pennsylvania, only 106 in Louisiana. And the Pennsylvania tax rises from $1 on a single store to $500 for each unit in a system with more than 500 stores in the State. The A. & P.'s bill $1,050,000 a year.

Not without a tussle had the Pennsylvania tax been jammed through at the personal command of Governor Earle. The chains amassed petitions from their customers, lined up the press and the farmers in almost solid opposition. Once last spring after Columbia Broadcasting System refused to allow speakers to blast the bill in an A. & P. broadcast, big advertisements appeared with the scarehead: THIS is THE STORY THE RADIO KEPT FROM You. Below the condensed versions of undelivered speeches were the signatures not only of the principal chains but also of the Chester County Dairymen's Co-Operative Association, the Lehigh Valley Co-Operative Farmers' Association and the South York County Dairymen's Association.

Meantime the chains hammered with a joint advertising campaign of their own with themes like these:

Will you be better off if your food bills are increased?

Will the Pennsylvania Legislature raise the price of food?

Legislators meeting in Harrisburg: Will you take the responsibility for cutting the wage of every worker in Pennsylvania?

At one time the unhappy legislators showed a disinclination to accept any such responsibility, and the measure was defeated in committee in the Democratic Senate. The chains thought they had won. Suddenly Governor Earle put the so-called Store Tax Bill on his list of "must" legislation, turned on the kind of bone-crushing political pressure for which Pennsylvania, Democratic or Republican, is justly famed. The Governor's philosophy: "Let's have many small capitalists instead of a few large ones."*

But Governor Earle, whose personal share of the country's un-redistributed capital is considerable, was to hear from the chains once more. Last week in what looked like an adaptation of the Sit-Down, the chains closed hundreds of their Pennsylvania stores with a bang, After turning the key on 80 stores in & around Philadelphia, an A. & P. official announced bluntly: "The stores we have closed couldn't have operated at a profit under the tax. Those where the volume of business is such that the business will show a profit after including the tax will be kept open." P. H. Butler Co. shut down one-fourth of its 200 units. American Stores closed about 70 stores and stated: "Moreover, the stores will not be reopened. We have removed the goods and fixtures, locked the stores up and returned the keys to the owners in the hope they may be able to find some new tenants."

Only reassurance Governor Earle got last week as he prepared to sign his pet bill was from the cinema chains, which are included on the same basis as chain stores. Said a spokesman from Warner Brothers, biggest chain in the State (180 theatres) : "We are submitting gracefully. Everybody's sort of getting used to this tax business. I guess we ought to be happy we aren't living in Germany or Russia."

Biggest chain store in Pennsylvania out-side of A. & P. is America Stores Co. with about 1,743 of its 2,776 units in the State. It has a heavy concentration of stores in & around Philadelphia, its home town. Founded in 1917 as a merger of five old chains, ASCO was ruled until last spring by Samuel Robinson, a chain-store pioneer who started in 1891 with Vice President Robert H. Crawford and joint capital of $1,400. He now divides his time between Bryn Mawr and Pasadena, goes in for philanthropy in a quiet way, showering funds on Philadelphia hospitals and Presbyterian bodies. In his pocket he always carries a large supply of religious tracts, each with a $1 bill tucked between the leaves. These he gives to beggars, often following them to retrieve the money if they head for a saloon.

Old Mr. Robinson's nephew William Park took over ASCO's presidency last spring when the tax fight was growing hot. He went to Philadelphia from a Michigan farm, started to work for his uncle at 20. He has been working in the same spot ever since, and though the building has changed the atmosphere has not. ASCO's general offices are as cluttered as a warehouse. President Park works in shirt sleeves behind a partition, washes his hands like the rest of the staff at an open sink in the corner. Pay telephones are provided for visitors. Placards warn salesmen against smoking or parking their cars on the left side of the street outside. Mottoes proclaim, the thoughts of pious Mr. Robinson in words like these: "Honesty and Truthfulness combined with Speed and Correctness are necessary to make good Business Men and Women."

Now 45, redhaired, earnest, optimistic, so retiring that no newspaper has ever published a picture of him, President Park lives simply in suburban Haverford, two miles from his archenemy, George Earle. He is a pillar in the National Association of Food Chains, which has been creating an astonishing reserve of good will for its members by organizing selling drives to relieve farm surpluses. Last year it started off with a nation-wide campaign in canned peaches, cleaned up the glut in short order. When last year's Drought flooded the market with cattle that could no longer be fed, the chains managed to increase beef sales 34% in the middle of summer, a poor beef season. The same thing was done with turkeys last autumn. From this type of practical relief the chain stores have gained most of their new-found farmer support. Asserting that the big chains can do more in such emergencies than the Government, President Park declares:

"The chain-store corporations have been woefully weak in telling their story. They have turned the other cheek every time they were slapped." Together with A. & P. he has hired Lawyer Francis Biddle to fight the constitutionality of the tax, but his real faith is in the court of public opinion. Says he: "I am convinced the craze for anti-chain-store legislation will evaporate like fog in the sunshine when people become acquainted with the facts."

*Currently engaged in building himself up with Southerners as Presidential timber for 1940, Governor Earle is not unaware how unpopular chain stores have been in the South.

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