So I set out to do a little story on the rise and fall of the Montgomery Ward department store chain, when I realized you can't really tell the story without first going into a little history of the Grange movement.

In 1866, following the Civil War, President Andrew Johnson sent a clerk from the Bureau of Agriculture, Oliver Kelley, out into the field to assess the economy of the South. Kelley returned with deep impressions of the poverty, isolation and backwardness of the farmers of the region and determined that they should organize in some form for the purposes of softening the harsh conditions in which they lived.

Kelley and his group of government clerks then founded the Patrons of Husbandry, commonly known as the Grange (an old word for granary), or Grangers. It started out mostly as a social organization, but with the collapse of farm prices in 1868, there was a bit of an agrarian revolt, and the Grange began to promote farmer-owned cooperatives for buying and selling. Their ideal was to free themselves from the conventional marketplace.

Specifically, the Grange proposed "To develop a better and higher manhood and womanhood among ourselves…To foster mutual understanding and cooperation…To buy less and produce more, in order to make our farms self-sustaining…To discountenance the credit system, the mortgage system, the fashion system, and every other system tending to prodigality and bankruptcy."

One of the secrets of its initial success was the policy of admitting women to membership, and for farmers' wives the Grange, with its social structure of meetings, picnics, and lectures, was a welcome respite from the drudgery of farm work.

The Grange embarked upon various business ventures, and, in an attempt to eliminate the middleman, they established hundreds of cooperatives (particularly creameries and grain elevators), based on the "Rochdale" plan, whereby profits were divided among the shareholders, in proportion to their purchases.

By the end of 1870 there were Granges in 9 states, and by 1875 the movement had 1.5 million members within 20,000 chapters. And so it was that the Grange became a political movement of some success. This took various forms, including the election of legislatures and congressmen sympathetic to the farmers' demands.

The chief political goal was to win relief from the rates charged by the railroads and warehouses. In his book, "A History of the Supreme Court," author Bernard Schwartz writes that the outrage grew out of the "Highly speculative railroad building, irresponsible financial manipulation, and destructive competitive warfare (which) resulted in monopolies, fluctuating and discriminatory rates, and inevitable public outcry. The grievances against the railroads were especially acute in the Midwest, where the farmer was dependent upon them for moving his crops, as well as on the grain elevators in which those crops were stored."

The Grange, through their political movement, thus brought about the passage of "Granger Laws," initially in the states of Illinois, Wisconsin, Minnesota, and Iowa, which included schedules for maximum rates that the railroads could charge, as well as a ban on higher fees for short hauls over long. And there were other irritants they sought to abolish, such as a ban on free passes for public officials, and anti-consolidation laws to maintain competition.

Business fought back and in 1877, U.S. Supreme Court Chief Justice Morrison Waite ruled in the case of "Munn v. Illinois," one which Justice Frankfurter would later say "places it among the dozen most important decisions in our constitutional law." It upheld the power of the states to regulate the rates of railroads and other businesses - a principle that stands to this day, and which has served as the basis for governmental regulation in many different fields.

In the key case, the principle was established that any business could be regulated, since the conduct of it affected the community at large. Justice Waite:

"Property become(s) clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, anyone devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest he has thus created."

Munn v. Illinois was not only a victory for the Grange, it transformed the course of business law. As one Supreme Court justice noted later on, "There is scarcely any property in whose use the public has no interest." So you can thank the Grange for more competitive business practices to this day.

But the Grange movement itself proved to be short-lived. During the midterm elections of 1878, Grange candidates (as represented mostly by the Greenback party), garnered 15 congressional seats, but by 1884, the Grange had disintegrated.

And what did Montgomery Ward have to do with all of this? Well, in 1872, Aaron Montgomery Ward, a clerk and traveling salesman who thought he could sell goods directly to people in rural areas by mail, established the first mail order business in America, sending out a one-sheet leaflet that offered various bargains.

Of course there is a lot more to the Montgomery Ward story, and, next week, we will focus on how after World War II, management made some critical errors which led to its collapse some 50 years later.

Sources:

"A History of the Supreme Court," Bernard Schwartz
"A History of the American People," Paul Johnson
"America: A Narrative History," Tindall and Shi
"The Growth of the American Republic," Morison, Commager,Leuchtenburg

Brian Trumbore