The Merchant Chief

Few U.S. retailers have ever had such a flawless grasp of supply and demand as Boston's famed brothers, Lincoln and Edward Filene. The last of the 19th century merchant princes, they made William Filene's Sons Co. into the world's largest specialty store (clothing and accessories only) and a bargain mecca admired from Paris to Peking. But Lincoln Filene, who survived his brother by 20 years, made Filene's into something much more: the hub of a nationwide Federated Department Stores network of 38 outlets with annual net sales of $601.5 million, the fountainhead of a revolution in U.S. merchandising, and the pioneer of a radical new approach to personnel problems.

A serene, twinkle-eyed little Bostonian, Lincoln Filene was already busily at work in a haberdashery founded by his father, a Prussian immigrant tailor, by the time he was ten, and he never had another job. In 1891 he took over the business with his brother, and promptly set out to prove a new idea for U.S. retailers. "If we were to create contentment in front of the counter," he said, "we had first to create contentment behind it."

Benefits & Bargains. At a time when many businessmen glared at giving workers a say in working conditions, the brothers out-unioned the unionists in 1898 by launching the Filene's Cooperative Association: clerks and salesgirls were elected to the store's board of directors, were sole arbiters of the store hours and holidays. The employee-directors did not work out. But other benefits took firm hold: an employee restaurant, a clinic, a library, a clubhouse, a credit union. Profit-sharing, retirement benefits, summer Saturday closings, systematic job evaluations, even sending executives to the Harvard Business School--all were pioneered by the Filenes. Said Lincoln: "Every release of the worker to more use of his mind, every addition to his skill, means steadily better wages. Society can well afford to pay a steadily rising wage bill so long as it is steadily enriched by new intelligence."

Bargains & Brahmins. Filene's Sons, as well as society, reaped the new riches. The first great discounter, the store had sales of $1,000,000 by the turn of the century, soon pushed them higher with a spectacular "automatic bargain basement." The Filenes stuffed their basement with discontinued lines, remainders, seconds that they bought far below original price. Then they passed on the savings: an automatic 25% off after twelve days, 50% after 18 days, 75% after 24 days, give it away to charity after 30 days. It rarely went that far. Only one-tenth of 1% of the goods ever went to charity.

Local merchants soon learned to stock their own stores from Filene's--if they could beat customers to the counters. As many as 150,000 breathless shoppers stormed the basement on the first day of a new sale--Boston fishermen and Harvard facultymen, U.S. Senators and Back Bay housewives. "Proper Bostonians," says a Filene vice president, "have always had an eye for a nickel."

Coolness & Civics. To end wasteful secrecy in merchandising, Lincoln Filene in 1916 persuaded major U.S. stores to open up their books for the benefit of all, went on to help form Associated Merchandising Corp. for cooperative bulk buying from Europe and Asia (now more than $1.5 billion a year). Lincoln wanted to expand Filene's nationwide by merging with other stores; Edward was stubbornly against it, and eventually dropped out of the company's active management.

Running the company alone, Lincoln helped build Federated Department Stores into what ranks (on first-quarter earnings) as the nation's biggest retailer, adding such stores as Columbus' F. & R. Lazarus Co. (1929), Brooklyn's Abraham & Straus (1929), Manhattan's Bloomingdale Bros. (1930), Houston's Foley Bros. (1949), Dallas' Sanger Bros. (1951). Yet he was never so busy selling that he forgot the workers and society around him. Filene was a leading spirit of the New England Industrial Development Corp. to encourage small businessmen, pumped hard for better schools, wrote three books, was a founder of the American Arbitration Association and served the Government in setting up state job-insurance programs. "I like to tell people that just making money out of a city and its inhabitants isn't the only thing to do." The inroads of age began to tell on Lincoln Filene two years ago. He no longer minded the store. But only when he could no longer recall the crowded days of a life nearly a century long did he retire, and then last month, at 92. One morning last week in his home overlooking a lake at Marstons Mills on Cape Cod, Lincoln Filene, suffering from arteriosclerosis, died quietly, the last of an enterprising generation. At the funeral there was no eulogy; he never believed in them.

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