The Retail Merchants of Canada versus the Mail-order Catalogue

This cash register, in the collection of the Canadian Postal Museum, was used at the post office and general store of Val Morin Station, Quebec.

by John Willis

The mail-order catalogue brought an increasingly varied and modern selection of goods to the homes of Canadians. It was so successful that it threatened the livelihood of a more vulnerable brand of retailers, the small country merchants. Their livelihood became a big issue, nationally and politically.

Introduction | Organized Opposition to Mail Order | Harry Stevens, Champion of Small Business | The Royal Commission on Price Spreads | The Bigness of Business | The Competition: Unfair? | Did They Pay Their Fair Share of Taxes? | Small-town Friends and Enemies | East versus West | Clergy Support of Independent Retailers | Conclusion | Further Reading

Introduction

The mail-order catalogue brought an increasingly varied and modern selection of goods to the homes of Canadians from coast to coast. Everyone, it seemed, could jump on the mail-order bandwagon. This was especially true of rural areas and small towns where there were no large department stores.

The catalogue afforded farmers, miners, and loggers and their families an opportunity to buy a vast array of goods, but, at the same time, it threatened the livelihood of small-town merchants who had difficulty competing with mail-order houses and were put out of business as a result.

In 1934, matters came to a head. Retail merchants mounted an offensive against mail-order corporations and big-city department stores that resulted in a parliamentary enquiry. It eventually led to a full Royal Commission. The issue of small versus big business was on everyone's lips during the 1935 federal election. The Reconstruction Party was created to defend small businesses that were experiencing hard times during the economic downturn of the 1930s.

Organized Opposition to Mail Order

In the late 19th century, agitation against big retailers was rampant in the U.S. and Canada. The movement started in the U.S. and subsequently spilled over into Canada, where the Retail Merchants Association (RMA) was founded in November 1896. The RMA demonstrated a long-standing opposition to the mail-order catalogue, which it viewed as unfair competition in the local economy.

Inside the Dazé General Store, Arnprior, Ontario, 1910. This merchant stood to lose quite a lot due to the competition from big-city mail-order companies, which could send groceries and canned goods to its customers through the mail.

In a 1911 petition, the RMA called on the Post Office to protect retail merchants from the mail-order houses:

In 1926, the RMA proposed that the federal government introduce a ten-per-cent tax on mail-order companies and distribute the proceeds to the provinces according to the volume of mail-order business.

The Post Office department was aware of the controversial nature of mail order. In 1923, an internal proposal to lease advertising space in post offices across Canada would have prevented the department from accepting advertising for mail-order businesses, as well as tobacco, beer, and liquor.

Simpson's casts a long shadow on the landscape. In the 1930s, Simpson's introduced the suburban mail-order office in three Ontario locations: Brampton, New Toronto, and Oshawa. Around 1933, sales were $286 000. The offices were operated by commission agents, who had a vested interest in drumming up business. Simpson's Fall/Winter Catalogue, 1930-31, cover.

Harry Stevens, Champion of Small Business

Harry H. Stevens began his political career in British Columbia as a strong opponent of oriental immigration.

During the 1930s, with the economy in a depression, Canadians desperately looked for culprits and solutions. Various left-wing and right-wing approaches were proposed. Harry Stevens, member for Kootney East and Minister of Trade and Commerce in the Bennett cabinet, emerged as the champion of small business.

In January 1934, Stevens spoke in Toronto to a convention of shoe merchants and manufacturers. He criticized big commercial businesses, particularly, "the practise of mass buying of huge department and other chain store organizations, and the use of this power in the destruction of the small retailer ... and the crushing of the manufacturer who will not accept price dictation of the mass-buyer." He alluded to sweat-shop practices in the clothing industry as a means of bringing costs down and the requirements of mass buyers for the cheapest prices possible.

The presidents of Eaton's and Simpson's lashed out at Stevens in the press the next day. Events unfolded swiftly. Prime Minister Bennett instituted a select committee of the House of Commons to do something about the Depression before the next federal election.

The select committee's mandate was to enquire into the large spread between the amounts received by producers and those paid by consumers, the assumption being that some force was artificially raising the prices at the expense of the consumers. Its proceedings were front-page news across Canada for about four months.

The business practices of large corporations, including food-processing giants such as Canada Packers, as well as Eaton's and Simpson's, were investigated. Witnesses made sweeping statements in favour of independent retailers. One called them "the most important factors in our system of distribution." The National Fair Trade Council generally regarded "the growth of large department store organizations, mail order houses and chain stores as detrimental to the general interests of the country."

The Royal Commission on Price Spreads

That July, the select committee became a full-blown Royal Commission. Stevens again presided over proceedings. The Retail Merchants Association played an important behind-the-scene role, providing witnesses and advice. Its monthly magazine was enlisted to supply additional information to the Commission. The Commission was so successful that top executives from Eaton's and Simpson's complained about Stevens to the Prime Minister. By January 1935, Bennett and Stevens had a falling out. Bennett probably worried that Stevens's crusading reformist position was alienating corporate backers of the Tory party. But, he was also worried about Stevens as a potential challenger for the leadership of the party.

Early in 1935, Stevens was forced out of the cabinet. In the ensuing fall election, he retained his seat and ran as leader of the newly formed Reconstruction Party. The party held large rallies: 10 000 in Toronto, 5300 in Winnipeg and 2000 to 3000 each in Calgary, Saskatoon, and Regina. Militants of the RMA and other small-business lobby groups were active in his campaign. However, the party was only able to garner 389 000 votes (less than nine per cent of the popular vote), roughly the same as the CCF. The Liberals received two million votes while the Conservatives garnered 1.3 million votes.

Stevens lost his bid to reinvent the politics of the country in 1935. Nevertheless, the testimony he heard and included in the Commission's report provides an interesting perspective from which to view the antagonism between big and small business underlying the whole debate for and against mail order.

The Bigness of Business

This notice addressed to Army and Navy customers in the 1930s was, from a country merchant's point of view, provocative to say the least. Army and Navy Fall/Winter Catalogue, 1933-134.

In 1929, three companies were responsible for 80 per cent of all department store sales in Canada: T. Eaton Co., Robert Simpson Company, and Hudson's Bay Company. Eaton's and Simpson's were very active in mail order. HBC stopped publishing its seasonal mail-order catalogues in 1913 and operated a limited mail-order business. Department stores accounted for 10 per cent of the Canadian retail market in 1929, 12.6 per cent two years later. Evidently, the early years of the Depression worked to the advantage of department stores, possibly at the expense of smaller general stores and retail shops.

Was discretion the better part of receiving your Eaton's order? Perhaps, given the opposition to the catalogue in certain quarters, it was. Eaton's Fall/Winter Catalogue, 1911-12, p. 2.

Eaton's alone accounted for 7 per cent of all retail sales in Canada in 1930. It was the personification of big business in Canadian retailing with its 13 large department stores, 5 mail-order distribution centres, 32 smaller department stores, 7 factories, 9 buying offices (some overseas), and 112 mail-order offices. Simpson's was the second largest firm with its flagship store in Toronto, 3 major mail-order facilities, and several manufacturing companies, among them a pharmaceutical company. It too had buying offices overseas.

The Competition: Unfair?

Eaton's and Simpson's operated at a scale so large that they were able to obtain goods from manufacturers at cut-rate prices. They could then sell via catalogue or over the counter at the lowest prices. Eaton's and Simpson's sometimes sold items at a loss in order to attract business. This technique of selling, known as the "loss leader," is still commonly practised today.

Money, the ultimate bone of contention, was the business of rural customers and was what the small merchants and mail-order houses were fighting over.

Small-time retailers were unable to compete with these low prices. A merchant in Nova Scotia was frustrated by the competition: "Mass buying by the larger retail department stores has placed me in a position where I cannot compete with mail order prices. Although I pay cash for my wants by borrowing at times from the bank, we independent merchants can sell the goods if we only can compete with mail order prices. I have been trying for years to buy to compete and no success."

An Alberta merchant wrote the premier in 1936: "Yes sir, business is simply hell for the little man, nowadays." Times were tough, but even when they were not so bad, the competition from the big corporations did not seem fair. Eaton's, for example, could accumulate huge stocks, which, by means of economies of scale and price leverage, allowed the company to compete in virtually every corner of the rural economy. As if this was not enough, the business practices of the large mail-order operations were at times unorthodox.

The Saskatchewan RMA accused Army and Navy, a department store and mail-order operation based in Regina, of practising false advertising in its radio spots and billboard publicity campaigns. Eaton's of Winnipeg was accused of issuing contracts to area correctional facilities, where female inmates made blouses and mattress covers free of charge. Conditions in Eaton's company factories were considered appalling.

Army and Navy advertisement from the Regina Leader Post, February 23, 1934. The document was one of many exhibits presented before the Royal Commission on Price Spreads.

Did They Pay Their Fair Share of Taxes?

Whether in Summerside, PEI, Quebec, or Saskatchewan, the refrain among retail merchants was the same. Mail-order companies were not paying their fair share of taxes. As a result, the burden of public responsibility fell inordinately upon the shoulders of local businessmen.

Advertisement from the Stettler Independent, November 1, 1928. Many stores offer better prices than the catalogue houses!

The Manitoba chapter of the RMA believed that business and realty tax assessments on the Eaton's complex in Winnipeg were based on estimates that were nowhere near their true value. The Summerside Board of Trade recommended that the British North America Act be amended to empower the provincial government to tax mail-order companies. The Independent Retail Association, on the other hand, proposed that the federal government collect taxes on mail order. The RMA's Quebec chapter proposed a five-dollar tax on all catalogues.

The charge that mail-order companies were not conducting themselves as good corporate citizens did not flow only from a preoccupation with the need to balance the municipal tax base. Much more was at stake, including a commitment to the rural way of life that small town businessmen and their allies in the Reconstruction Party were trying to preserve.

Small-town Friends and Enemies

Front page of the Stettler Independent, November 22, 1928, encouraging loyalty to community business.

Small-town merchants viewed themselves as the backbone of rural communities. Their economic health reflected the economic and social health of the entire community. The community was part urban - townspeople and villagers - and part rural - residents of surrounding farms and bush. Merchants explained how blacksmiths bought at the local grocery, the grocer traded with the farmer, the farmer had his horses shoed at the blacksmith, and so on. The economic balance was overturned when some of the rural community purchased goods and services outside the village economy.

The result could spell disaster, at least as far as the Canadian Grocer was concerned in 1913:

The view of a community closed in upon itself increased a community's distrust of outsiders and newcomers, who might be of a different religious faith or background, or who hailed from a different part of the country. They were easily recognized.

East versus West

Buy-Alberta Advertisement from the Red Deer Advocate, November 27, 1929.

In the Canadian West, Eaton's and Simpson's were perfect targets for irate independent retailers. The companies were big, competitive, and, above all, from Ontario. Their profits invariably drifted back to the East at the expense of local (western) interests. How satisfying it must have been for a Lethbridge, Alberta, newspaper to point out that during the First World War, Eaton's did not donate to the local chapter of the Red Cross, but to the Red Cross in Winnipeg, where the company had its regional headquarters.

The local newspaper was a natural ally of the country merchant, like Matt Stanley, the fictitious small-town newspaperman in W. O. Mitchell's Roses are Difficult. Here, editors had no difficulty understanding where the interests of their newspaper lay, namely on the main streets of their communities. Main-street businesses bought much of the advertising space in the local paper. Newspapermen and advertisers rubbed shoulders in their day-to-day living, at church, at home, at school, and at the nearby watering hole.

Clergy Support of Independent Retailers

French-Canadian Catholic clergy objected to the graphic depiction of the human body, especially the female body, in some catalogues. In some instances, mothers were encouraged to keep such pages from the sight of their children, especially the boys. Dupuis Frères Catalogue, 1944, p. 16.

Another natural ally of the independent retail movement was the Protestant and Catholic clergy. Protestant clergymen appeared on the podium with Harry Stevens of the Reconstruction Party throughout the federal election campaign of 1935. Stevens's championing of the "little guy" in his characteristic Methodist tone no doubt appealed to them.

In Quebec, the Catholic clergy condemned the catalogue as an example of consumerism and excessive self-indulgence. Catalogues contained pages where the human body was shown too explicitly. Spending on catalogue goods interfered with the necessary and morally good task of saving at the local credit union. Housewives were advised to throw their catalogues in the garbage.

Catholic priests were not alone in expressing their moral opposition to catalogue companies. The minister of the Knox Presbyterian church in Portage La Prairie, Manitoba, wrote an irate letter to the Hudson's Bay Company in 1916 because the company published a price list of mail-order liquors on the very day that a ban on liquor sales in the province of Manitoba came into effect.

In this and other instances, there was a moral unease with the catalogue. This sense of unease was part of a general feeling of angst, as the traditional establishment of rural and small-town Canada saw its leadership coming apart at the seams.

Conclusion

Surprising indeed was the depth of feeling on the catalogue issue, as well how much the story of the opposition to the catalogue has to tell us about the history of our country, both from the turn of the 20th century onward and during the troubled decade of the 1930s.

The movement against Eaton's and Simpson's demonstrated the extent of social malaise throughout rural society at a time when all of Canada was increasingly dominated by big-city interests and preoccupations. The issue was, from the retailers' point of view, economic. However, it also had strong moral (clerical) and political overtones. The career of one politician, Harry Stevens, literally rose and fell on the issue. With him, seemingly the fortunes and aspirations of small-town and rural Canada also rose and fell.

Historians regularly point to the rural angst experienced by French Canadians during the early and middle part of the 20th century as they adapted their rural tradition to a new urban-industrial way of life. The experience was characterized by much frustration and hardship. The history of the opposition to the mail-order catalogue reminds us that English Canadians inhabiting rural communities also experienced their own version of hard times as the bright lights of the big city began to shine upon them.

Further Reading

D'arcy, Hande. "Saskatchewan Merchants in the Great Depression: Regionalism and the Crusade against Big Business." Saskatchewan History 43(1) (Winter 1991): 21-33.

Marchand, Suzanne. Rouge à lèvre et pantalon: Des pratiques esthétiques féminines controversées au Québec de 1920-1939. Les cahiers du Québec. Montréal: Hurtubise, 1997.

Morod, David. Store Wars: Shopkeepers and the Culture of Mass Marketing, 1890-1939. Toronto: University of Toronto, 1996.

Report of the Royal Commission on Price Spreads. Ottawa: Printer to the King's Most Excellent Majesty, 1935.

Rudin, Ronald. "Alphonse Dejardins et le marketing des caisses populaires, 1900-1920." In La culture inventée: Les stratégies culturelles aux 19^e et 20^e siècles, edited by Pierre Lanthier et Guildo Rousseau, pp. 173-186. Québec: I.Q.R.C., 1992.

Wetherell, D. G. Main Street and the Evolution of Small Town Alberta, 1880-1947, Edmonton: University of Alberta Press, 1995.