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SPEAKER_04: 50 Things That Made the Modern Economy with Tim Harford Beware. Don't patronise Montgomery Ward and Co. They are deadbeats.
SPEAKER_02:
SPEAKER_01: Because the Montgomery Ward brand still exists, I'd better make clear that's not my current advice. It was a warning issued by the Chicago Tribune on November 8, 1873. What had Aaron Montgomery Ward done to convince the Tribune's editorial staff that he was running a swindling firm, preying on gulls and dupes in the countryside? Well, Ward's flyers were offering suspiciously utopian prices on a suspiciously wide range of goods. Over 200 items. And get this, not only did Montgomery, Ward and Co not display their wares in a shop, they employed no agents.
SPEAKER_03: In fact, they keep altogether retired from the public gaze and are only to be reached through correspondence sent to a certain box in the post office.
SPEAKER_01: Obviously this must be some kind of scam, mustn't it? It seems not to have occurred to the Tribune that Ward might be able to offer his utopian prices precisely because he kept no expensive premises and employed no middlemen. But the threat of a lawsuit soon helped the editors to wrap their heads around Ward's new business model. And a few weeks later, they printed a grovelling apology. Ward put it on his next flyer. Still in his 20s, Aaron Montgomery Ward had made his way to Chicago after working as a clerk in a country store and got a job as a salesman for the future department store magnate Marshall Field. It involved touring more of those rural general stores in farming communities. And Ward realised how limited was the selection of goods they stocked and how high were the prices. The farmers had noticed that too. They were already exploring alternative ways to get goods more cheaply to their far flung rural outposts. Mail order existed, but it wasn't common. Just a few specialist firms with a limited line of wares. The opening Ward saw was ambitious, but simple. Use mail order to sell many things directly with low markups on wholesale prices and buyers would pay on delivery. So if they didn't like what was delivered, they could refuse to pay and send it back. A chastened Chicago Tribune finally got it. It is difficult to see how any person can be swindled or imposed
SPEAKER_03: upon by business thus transacted. Ward, whose talents extended to copywriting, later gave
SPEAKER_01: the world the enduring phrase, satisfaction guaranteed or your money back. Just two years
SPEAKER_01: after rousing the Tribune suspicions, Ward's flyer had become a 72 page catalogue listing nigh on 2,000 items. It was basically just a list of goods and prices. But Ward's catalogue was later named by a New York literary society, the Grolier Club, as among the 100 most influential books in American history, up there with Moby Dick, Uncle Tom's Cabin and the whole book of Psalms. It was, they said, perhaps the greatest single influence in increasing the standard of American middle class living. And it inspired competitors, notably Sears Roebuck, which soon became the market leader. The story goes that the Sears Roebuck catalogue had slightly smaller pages than Montgomery Ward's, with the intention that a tidy-minded housewife would naturally stack the two with the Sears catalogue on top. By the 19th century's end, mail order companies were bringing in $30 million a year, a billion dollar business in today's terms. In the next 20 years, that figure grew almost 20 fold. The popularity of mail order helped fuel demands to improve the postal service in the countryside. If you lived in a city, you'd get letters delivered to your door, but rural dwellers had to schlep to their nearest post office. The government gave in and realised that if they were going to send postal workers into the boondocks, they'd better improve the road network too.
SPEAKER_01: Rural free delivery was a huge success. Montgomery Ward and Sears Roebuck were among the main beneficiaries. This was the golden age of mail order. Catalogue's ballooned to a thousand lavishly illustrated pages. New editions were eagerly awaited. You could buy an entire house. For $892, for instance, Sears Roebuck would send you a five room bungalow, or at least they'd send you the components. And easy assembly instructions, which must have been more daunting than the ones you get from Ikea for a billy bookcase. Many of these mail order kit houses are still standing. 100 years on, some have changed hands for over a million dollars. The catalogue itself has endured less well. Montgomery Ward and Sears both started building department stores. As wider car ownership made mall shopping more popular, the catalogues became irrelevant. Montgomery Ward nixed theirs in 1985. Sears a few years later. Then came the internet. Jeff Bezos feels no need to send you a thousand page Amazon catalogue every year. But if the heyday of the mail order catalogue has long since passed, its dynamics are now playing out all over again. The world's rising economic power, a government building roads and communications infrastructure in isolated rural areas, customers fed up with existing retail options, visionary entrepreneurs with new business models that let you browse and order from home. The country is China. For the postal service, read the internet, and the roles of the mail order giants are being played by China's e-commerce titans, JD.com and Alibaba. China has thrown itself into online shopping. Its citizens spend about as much online as those of the US, the UK, France, Germany and Japan combined. And drawing rural areas into the economy isn't just about expanding consumer choice and middle class living standards. When you have good roads and access to information, you have more scope to make and sell stuff. The economists, James Feigenbaum and Martin Rotenberg studied how rural free delivery rolled out in America and found that when it arrived in a new county, investment in manufacturing soon followed. The same process seems to be unfolding in China, which has its Taobao villages, clusters of rural enterprises producing everything from red dates to silver handicrafts to children's bicycles. Taobao is an online marketplace owned by Alibaba. It's basically just a list of goods and prices. But perhaps it can aspire to shape society as much as any titan of literature, like Montgomery Ward.
SPEAKER_04: Montgomery Ward's early days are chronicled in Sewing the American Dream by David Blonky. For a full list of our sources, please see bbcworldservice.com slash 50things.
