It is axiomatic that people who worship the sun will resent people who proclaim the scientific laws of heat. And as long as Americans believe their prosperity is linked to the fortunes of familiar old corporations, Americans will resent the laws of economic change. Consider the case of Sears, Roebuck.
Retailing has become rough sledding for Sears, which reportedly is thinking of closing up to 100 of its smaller stores and shrinking its famous "Big Book" catalogue operations. Bad news? Not necessarily. Times have changed, as usual.
Time was, in 1886, Richard Sears was a 22-year-old railroad agent in North Redwood, Minn. Having on his hands an undeliverable consignment of watches, he discovered that he could sell such merchandise to agents down the line, who sold it in their towns. Sears paid the manufacturers when the agents paid him, so he needed no capital. He made $5,000 in six months, quit his $6 a week railroad job and, working with Alvah Roebuck, by 1898 was sending 583-page catalogues into the prairie.
Sears, Roebuck's path had been blazed by another Midwestern merchandising genius, Aaron Montgomery Ward. As a traveling salesman of dry goods, Ward had discovered what railroads and the Homestead Act had wrought -- a vast, thinly settled inland empire of lonely farm families. Ward's catalogue drew them into what historian Daniel Boorstin calls a "consumption community."
Ward's catalogue customers did not just send orders, they sent letters. One farmer proposed marriage to the girl modeling the hat "on page" 153 of your catalogue." Other letter writers chatted, as over the backyard fence:
"I supposed you wonder why we haven't ordered anything from you since the fall. Well, the cow kicked my arm and broke it and besides my wife was sick, and there was the doctor bill. But now, thank God, that is paid, and we are all well again, and we have a fine new baby boy, and please send plush bonnet number 29d8077."
Sears, Roebuck prospered with the help of rural free delivery, which made the Big Book as central to many rural lives as the Good Book. Indeed, in an oft-told story, a boy who was asked by his Sunday school teacher where the Ten Commandments come from replied, "Sears, Roebuck."
In 1907, Sears mailed 3 million fall catalogues; in 1927, 75 million catalogues and other mailings. There were lots of satisfied customers and resentful competitors. Some Main Street merchants paid children to turn in their families' Sears catalogues for burning.
In 1991 Sears's long run as the nation's largest retailer was ended by a company born and still headquartered in Bentonville, Ark., (population 11,000). Wal-Mart built an empire on an insight: the dispersal of Americans from central cities would enable a chain of discount stores to grow by starting in small towns and moving toward suburbs.
Just 12 years ago Wal-Mart had less than 12 percent of Sears's revenue. Today Wal-Mart is as resented as Sears once was by many merchants in the small towns. They have seen their downtowns wither as the small stores lose customers to the Wal-Marts out along the highways.
Small stores lack Wal-Mart's muscle in negotiating advantageous relationships with vendors. Hence small stores, so important for so long to the social fabric of their communities, lose the price competition with Wal-Mart. Over time, and not much time, price competition overwhelms community traditions.
Wal-Mart is just one part of Sears's problems. Competition has become fiercer because many of today's most skillful retailers are specialists -- The Limited (fashionable apparel), The Gap (basic apparel), Circuit City (consumer electronics), Pier 1 and Ikea (home furnishings), Trak Auto (auto supplies). Furthermore, J. Crew, L.L. Bean, Victoria's Secret and thousands of other firms enable customers to shop by mail or by 800 numbers. Such companies put severe price pressure on Sears. And consumers know what they stand for, which is hard to say about Sears, which sells snow tires and baby clothes and power tools and cosmetics.
Sears has various strategies for coping with its changed environment, and in some form or other Sears will be around for a while. But whatever the future fluctuations of Sears's fortunes, its path from the prairie to the present says something about how to read economic news.
Americans read about the travails of, say, GM and IBM and other giants and become anxious. But behind the difficulties of an IBM may be the exciting story of a Microsoft.
Economic history, like the history of the Earth's species, is a story of adaptations and extinctions. In dynamic capitalism, the pace of change is generally rapid and usually accelerating. But freedom is not supposed to be restful.