Modie J. Spiegel (1871-1943)

Modie Spiegel, along with his younger brothers Sidney and Arthur, expanded their father’s erstwhile Chicago furniture retail business into one of America’s leading mail order firms, the Spiegel Company.

Updated: February 18, 2014

Introduction

During his four decades at the helm of the Spiegel Company (from 1893 to 1933), Modie Spiegel (born April 21, 1871 in Chicago, IL; died January 8, 1943 in Kenilworth, IL), along with his younger brothers Sidney and Arthur, expanded their father’s erstwhile Chicago furniture retail business into one of America’s leading mail order firms. In the process, the Spiegel brothers became innovators in credit merchandizing, installment plan sales, and advertising techniques. Above all, the publication of the iconic Spiegel catalog, beginning in 1905, defined the company’s image and popularity among its millions of customers throughout much of the twentieth century. Although Spiegel, Inc. (as the company was later renamed) would never come close to its main competitors Sears, Roebuck & Co. and Montgomery Ward in terms of overall sales, the company nevertheless managed to capture and retain a distinctive segment of the mail order market by specializing in apparel, home furnishings, and accessories aimed primarily at middle-class and working women.

Family and Ethnic Background

Moses Joseph Spiegel, also known as Modie, was the oldest son of Joseph Spiegel (1840-1918) and Matilda (née Liebenstein) Spiegel (1851-1937). According to family legend, his nickname, which he used officially later in life, came about as the result of the persistent mispronunciation of his birth name by a young niece.[1]

Modie’s father, Joseph Spiegel, was a German Jew who, together with his parents and three sisters, immigrated to the United States as an eight-year-old in September 1848. The Spiegel family left their home in the small village of Abenheim, near the city of Worms in the Grand Duchy of Hesse, during the violent revolutionary turmoil that engulfed the German states in 1848 and 1849. By the time of their departure, Joseph’s parents, the Rabbi Moses Spiegel and his wife Regina (née Greenebaum) had become disillusioned with the political situation in their homeland, and they were particularly concerned about rising anti-Jewish sentiment and government repression. Their firstborn son, the adventurous and rebellious Marcus Spiegel (1829-64) had become actively involved with the liberal-democratic revolutionaries after joining Franz Sigel’s Landsturm regiment, which fought against government troops in the state of Baden. But the uprising appeared destined to fail, and it was not long before the rebels started being arrested or even executed. With Marcus missing in action and presumed dead, the Spiegel family feared a devastating backlash and decided to flee the country. In August 1848, Moses and Regina Spiegel, their son Joseph, and their daughters Sarah, Minna, and Theresa crossed the border into France and headed to Le Havre, where they boarded the ship Española, bound for New York.[2]

Upon their arrival in America, the Spiegel family quickly settled among the sizable community of Jewish immigrants around Manhattan’s Lower East Side. Initially unable to speak English, Moses Spiegel earned a meager living by peddling needles, thread, and cloth. Regina Spiegel died about a year later, most likely as a result of a disease contracted during the Atlantic crossing. At first, Moses Spiegel found it difficult to cope with the loss of his wife and to care for his children, but he began to adjust to his new situation. He reverted to his original profession and eventually achieved great respect within the Jewish community as a rabbi and a teacher.[3]

Meanwhile,Marcus Spiegel suddenly reappeared. He had survived the revolution in Germany and had made his way to the United States by the spring of 1849. Marcus, however, did not stay in New York for long; rather, he decided to seek his fortune elsewhere: first in Chicago, where he found work as a dry goods clerk, and then in Millersburg, Ohio, where he married Caroline Hamlin and fathered three children. As the Civil War began, he became a staunch abolitionist, and in November 1861, he joined the Union Army’s 67th Volunteer Infantry Regiment as a Second Lieutenant. Marcus Spiegel was quickly promoted to the rank of colonel, thanks to his prior military experience in Germany. He became a war hero, was wounded at the Battle of Vicksburg, and died on May 4, 1864, in a Confederate attack at Snaggy Point, Louisiana.[4]

Other members of the Spiegel family left New York as well. In 1850, twenty-one-year-old Sarah Spiegel married Michael Greenebaum (her second cousin), the owner of a hardware store in Chicago. Her younger sister Theresa followed suit in 1856, when she married Henry Liebenstein, a successful Chicago furniture merchant and recent Jewish immigrant from Germany. For his part, Joseph Spiegel worked as an apprentice in several retail stores in New York until 1862. Inspired by the example of his older brother, Joseph enlisted as a sutler[5] for the 120th Ohio Volunteers in 1863. Marcus kept an eye on Joseph as both headed south to Louisiana as part of General Ulysses S. Grant’s army in the spring of 1864. There, Joseph witnessed his brother’s death in battle and ended up as a prisoner of war at Fort Camp, Texas, where he remained until May 1865.[6]

After the war’s end, Joseph Spiegel joined his sisters in Chicago, where he entered into the furniture business of his brother-in-law, Henry Liebenstein. He and Henry quickly became formal business partners, and Henry helped him set up a small home furnishings retail shop on Wabash Avenue, in downtown Chicago. For the next five years, the business thrived and their relationship became even closer when Joseph, at the age of thirty, married Henry’s niece, nineteen-year-old Matilda Liebenstein, on June 22, 1870.[7]

Exactly ten months later, Joseph and Matilda Spiegel celebrated the birth of their first child, a boy named Moses. Little Modie was barely five months old when the most devastating catastrophe in Chicago’s history occurred – the Great Chicago Fire of October 1871. Raging for over thirty-six hours, the fire destroyed approximately 18,000 structures in an area of about four square miles, killed about 300 people, and left roughly one third of Chicago’s 300,000 residents homeless.[8] Although Joseph Spiegel’s furniture shop was ultimately destroyed in the flames, he frantically managed to rescue most of his merchandise as the fire was spreading and stored it out of harm’s way in the backyard of his house at 833 Prairie Avenue. Thus, only days after the Great Chicago Fire, Joseph Spiegel was able to reopen his furniture business in a temporary location (at 320 Michigan Avenue), and within a year, J. Spiegel and Company had returned to a brand new building at 222 Wabash Avenue, where the business enjoyed a brisk rise in sales as the massive effort to rebuild Chicago moved forward.[9]

In 1872, Joseph and Matilda Spiegel had a second son, Sidney. By this time, the Spiegels had become well-established among Chicago’s bourgeoisie. They were prominent members of the small Sinai Congregation and practiced Reform Judaism.[10] Although they maintained their distinctive religious identity, the Spiegels appear to have been well-assimilated and thoroughly integrated into American society in every other way. Joseph Spiegel joined a Masonic Lodge and various social clubs;[11] he built up an extensive network of contacts with other entrepreneurs and bankers, and later also assumed civic responsibilities as a board member of the Michael Reese Hospital.[12] Joseph’s far-reaching connections proved to be very useful for his business. Following the sharp economic downturn in 1873, he entered into a new business partnership with Jacob L. Cahn and expanded J. Spiegel and Company. The company now dealt in fine furniture, retail, and some wholesale, and it also offered upholstering services to meet the demands of an increasingly competitive market (Chicago’s furniture manufacturing industry was second only to that of New York; with over a hundred manufacturers, it employed approximately 7,000 workers).[13] The business was profitable, largely due to Joseph’s merchandizing skills and effective store displays.

Modie and Sidney must have had a comfortable yet unremarkable childhood.[14] They were joined (somewhat unexpectedly) by a third brother, Arthur, in 1884. Eventually, at the age of seventeen, Modie entered his father’s business as a salesman. Shortly thereafter, Sidney also joined the firm as a part-time bookkeeper, while attending the Bryant and Stratton Business College.[15] The Spiegel brothers were being groomed as their father’s heirs and successors.

Business Development

J. Spiegel and Company continued to expand in the late 1880s. Now specializing in pricey, durable home furniture and “high art novelties,” the firm faced stiff competition from various local furniture retailers. Spiegel’s main clientele were affluent middle-class Chicagoans, who typically paid cash, but who were also quite limited in number. In order to lure more customers from the suburbs and surrounding rural communities into the store, Spiegel began issuing its first advertisement catalogs in 1888.[16] However, many of these new customers, some of whom travelled significant distances to downtown Chicago, proved to be very slow to pay for their purchases. This left Spiegel with overstocked warehouses of unsold merchandise and quickly plunged the company into great financial difficulties. In order to rescue the family business from bankruptcy, Modie Spiegel proposed to sell cheaper, lower quality furniture, and – more importantly – to offer customers credit and convenient installment plans. Joseph and Sidney initially opposed the idea, despite the fact that other enterprises, such as Singer Sewing Machine Company, had already successfully adopted similar payment plan options years earlier.[17] Nevertheless, in 1893, after much debate, Joseph gave Modie permission to reinvent the firm as the Spiegel House Furnishings Company, with a dramatically different business model.[18]

The Spiegel House Furnishings Company tried to set itself apart from its rivals by using aggressive advertising in newspapers (with either full-page illustrated ads or multiple smaller ads on several pages), extravagant promotional events (such as holiday sales featuring food and entertainment for customers), elaborate store displays that often evoked exotic locations (the interior of a Bedouin tent, for example), and a variety of high-pressure sales techniques. Soon after Modie started working in his father’s store, it became clear that he was a natural-born salesman who immensely enjoyed interacting with customers. He was over six feet tall, sported a handlebar mustache, always dressed in expensive suits, and had a flamboyant and outgoing personality, as well as a penchant for dramatic acting, which he honed in an amateur theatre company in his spare time. Along with numerous other salesmen in the new store, Modie applied a variety of well-rehearsed techniques on unsuspecting customers. One sales routine – frequently performed as a kind of shtick – was known as “the turnover.” It involved passing along (i.e., turning over) a hesitant customer from one salesman to another, using successive stages of emotional sales pitches and enticements for as long as it took to finally close the deal. Another wily scheme was known as “going to Detroit.” This routine went as follows: if a customer stubbornly resisted or appeared to be getting annoyed with a salesman’s efforts, Modie would suddenly swoop in from another part of the store, loudly berate the salesman for offending the customer, and then ostensibly fire the salesman on the spot.  Pointing to the door, Modie would say to the visibly despondent salesman, “Get out you no-good, you’re through! You’re going to Detroit, you loafer. Out!” Impressed by this display of authority on his behalf, the stunned customer would thus be much likelier to make a purchase, while the “fired” salesman quietly reentered the store through the backdoor, waiting until the customer had left. According to James Cornell, the “wild and wacky” antics of Modie Spiegel and his crew “would have put the Marx Brothers to shame.”[19]

Manipulative sales techniques such as these were commonly frowned upon in Europe and by the late 1890s states intervened to officially put an end to them. However, neither Orange Smalley nor James Cornell, in their exhaustive overviews of the company’s history, suggest that Spiegel ever violated any business laws or experienced any kind of backlash as a result of these dubious sales practices. On the contrary, both authors emphasize that Modie Spiegel’s success as a salesman was largely due to his mischievous charm. Traditional German ideals such as forthrightness and honesty in business were apparently not quite as expedient or profitable in the notorious “windy city” of Chicago.[20]

In sharp contrast to the extrovert Modie, Sidney Spiegel was quiet and withdrawn, preferring to focus on bookkeeping and other administrative tasks. Perhaps not surprisingly, the two brothers’ personalities frequently clashed. However, Joseph Spiegel was quite content to transfer more responsibilities to his oldest son.[21] With Modie now firmly in charge, business was booming more than ever. The World’s Columbian Exhibition of 1893, a celebration of the 400th anniversary of Columbus’ arrival in America, was a significant turning point that transformed Chicago’s cultural landscape.[22] It drew an estimated 27 million visitors and benefitted the city’s business community immensely. By that time, Chicago had become a shining example of modern urban planning; unemployment was low, and a steady influx of immigrants swelled the city’s population to almost one million. Upwardly mobile working-class families, earning an average of eleven to twelve dollars a week, now became Spiegel’s main customer base. In need of affordable furniture and a variety of other goods that Spiegel added to its inventory (such as iceboxes, carpets, and ovens), these customers took advantage of Modie’s generous credit offers and convenient installment plans.

By “offering liberal terms of purchase to everybody so that buying is made easy to wage earners and people of moderate means,” as a 1903 advertisement in the Chicago Daily Tribune boasted,[23] the Spiegel House Furnishings Company took a considerable financial risk. However, remaining true to the company’s ubiquitous new advertising slogan, “We Trust the People,” Modie Spiegel employed a simple yet effective screening process, correctly assuming that stable, hardworking families that aspired to a middle-class lifestyle would be appreciative and reliable enough to not default on their payments. Customers who applied for credit at the Spiegel store merely had to fill out a standard form, providing some basic information, such as their address, marital status and number of dependents, occupation, and income. Modie Spiegel examined these application forms personally, asked customers a few additional questions, and then made an instinctive decision whether or not to grant his approval. His judgment appears to have been quite sound. In the period from 1893 to 1910, Spiegel only experienced moderate bad debt losses, and fewer than a dozen lawsuits against defaulting customers appear in the public record.[24]

The typical Spiegel payment plan for a piece of furniture is summarized by the following excerpt from a 1905 advertisement in Woman’s Magazine: “This full size Morris Chair [ . . . ] is of handsome solid oak with rich velour cushions and the price is only $5.75. You pay $1.00 cash and 50¢ monthly.”[25] Customers usually had up to one year to pay off their purchases in full. To increase business, Spiegel offered its customers convenient shopping hours from 10 a.m. to 9 p.m. on weekdays, and 10 a.m. to 6 p.m. on Saturdays. Moreover, the company regularly ran half- and full-page ads in Chicago newspapers, and Modie Spiegel even sponsored theatre productions, providing furniture and props for stage sets to draw ever greater numbers of customers to the store – evidently with great success. Spiegel’s profits increased dramatically from 1897 to 1903. In 1897, for example, Spiegel registered $5,894 in profit ($160,000 in 2010). The next year, its profits had more than tripled, to $18,296 ($496,000 in 2010); and in 1899, Spiegel’s profits rose sharply to $48,084 ($1.3 million in 2010). By 1903, Spiegel reported $106,842 in annual profits ($2.73 million in 2010).[26]

Under Modie’s leadership, the Spiegel House Furnishings Company soon moved to a new and much larger location on the corner of State Street and Van Buren in Chicago’s Loop (downtown business district), and the company added two additional branches on Chicago’s south side. An even greater expansion occurred in 1903, when the Spiegel House Furnishings Company bought the large retail furniture house of May, Stern & Co. for $500,000 ($12.8 million in 2010).[27] Under the new name of Spiegel, May, Stern & Co., the firm now became the biggest furniture and housewares retailer in the city of Chicago. Spiegel stock rose from an initial value of $100 per share in 1893 ($2,500 in 2010) to well over $900 by 1904 ($22,700 in 2010).[28]

At this juncture, Modie’s youngest brother, nineteen-year-old Arthur entered the well-established family business as a sales clerk. Notorious for his “wild streak” and with a reputation as a troublemaker in school, Arthur Spiegel initially displayed neither interest in nor aptitude for furniture retail. He apparently found working in the store to be extremely boring, and his first few months on the job seemed to consist mostly of being reprimanded for slacking off or for taking naps on piles of rugs in the showroom. In order to teach Arthur some much needed discipline, his father “banished” him to the warehouse. Ironically, Arthur actually relished the physical labor and hectic activity of this rather unglamorous environment and went on to develop a deeper understanding of business fundamentals, in addition to great problem-solving and organizational skills. Eventually, he was promoted to the company mailroom, where one of his more tedious duties was answering stacks of letters from people far and wide who wanted to purchase Spiegel merchandise on credit.[29]

Spiegel’s effective newspaper advertising campaigns were reaching ever larger numbers of potential customers throughout the Midwest; yet it was company policy to only extend credit to customers who came to the store, and not to deliver orders beyond the Chicago city limits. Arthur’s task was to use generic form letters to politely decline these out-of-town requests. However, he simply could not help but wonder how much more revenue they would generate if they met the evident demand for their goods and credit. For several months, Arthur Spiegel worked on a comprehensive proposal to address the various strategic and logistical aspects of expanding the company’s reach beyond the Chicago area. In devising this plan, he drew some inspiration from the success of Montgomery Ward and Sears, Roebuck & Co.[30] When he presented his ideas to his father and brothers, however, he encountered staunch opposition. The obstacles (e.g., merchandizing, credit verification, and shipping processes) appeared insurmountable. Joseph, Modie, and Sidney Spiegel found Arthur’s concept of expanding into the mail order business far too risky, especially with regard to payment defaults and repossession efforts. Nevertheless, Arthur refused to give up and continued to lobby for his plan, finally convincing the company hierarchy to allow him to open a small mail order department on a trial basis in 1904.

Arthur Spiegel devoted himself to the implementation of his project. He answered each letter personally, advising customers of their credit terms and payment plans, and calculating freight and shipping costs; he oversaw the bookkeeping and packing processes, and eventually hired several workers to help him, as more and more orders arrived by mail. Spiegel, May, Stern & Co.’s new mail order business was off to a good start, earning Arthur the respect of his elders, as well as a $1,000 bonus at the end of the year ($25,300 in 2010).[31] Having successfully completed the trial period, the next logical step for Arthur was to keep on expanding.

Initially, Spiegel’s mail order operations were limited to a radius of about one hundred miles around Chicago. In order to reach more customers and offer a greater selection of merchandise, the company published its first mail order catalog in 1905. Arthur singlehandedly compiled and published this modest twenty-four-page booklet (printed on extra-thin paper), which featured a variety of living room, dining room, bedroom, and kitchen furnishings, and a small number of kitchen appliances.[32] As the first company to offer credit through the mail,[33] Spiegel, May, Stern & Co. now modified its slogan to “We Trust the People – Everywhere.” As a result, it opened up a very large, previously untapped base of customers, who pushed Spiegel’s mail order sales to about $1 million in 1906 ($25 million in 2010).[34]

As mentioned previously, Spiegel had actually published numerous catalogs for marketing purposes since 1888. The 1905 version was in many ways similar to these earlier publications. It contained generic pictures of various items, along with vivid descriptions of materials, textures, and colors. However, there were also some crucial differences. The new Spiegel catalog allowed customers to conveniently place their orders by mail and explained the company’s unique credit policy in simple terms (i.e., $5 minimum order, fifteen percent down payment, monthly installments payable by cash, check, or money order), but the key component to its remarkable success was Arthur Spiegel’s editorial introduction. A clever blend of sales-pitch hyperbole and pre-Freudian mass psychology, the editorial sought to dispel widespread public mistrust against mail order purchases and installment plans by emphasizing three crucial concepts that became synonymous with Spiegel’s image over the next five decades. First, it underscored the notion that Spiegel was a highly reputable company that only dealt in quality products; second, it stressed that Spiegel offered a combination of quality, price, and credit second to none; and third, it emphasized that making credit purchases on installment plans was a convenient, perfectly respectable, and even sophisticated way of acquiring home furnishings that were previously only available to wealthy city dwellers.[35]

Thanks to the positive reception of the Spiegel catalog and the expansion of the company’s shipping radius to 500 miles, mail order sales continued to rise during the following year. Spiegel, May, Stern & Co. was subsequently decoupled from the Spiegel House Furnishings Company so that it could focus exclusively on further expanding its mail order business and thereby assume greater debts, while allowing the traditional retail branch to conserve its limited resources. Arthur Spiegel became president of Spiegel, May, Stern & Co., while Modie Spiegel continued to operate the furniture stores, with Joseph and Sidney’s help.[36]

By 1910, the mail order company employed about 300 people and had relocated to new headquarters on West 35th Street.[37] Along with dramatic growth came a massive expansion in its line of merchandise. The Spiegel catalog soon exceeded 136 pages and featured items ranging from clocks and lamps to refrigerators and floor coverings. Only two years later, in 1912, Spiegel, May, Stern & Co. even launched its own line of ladies’ apparel under the name of the fictional designer Martha Lane Adams. The “Martha Lane Adams” line was so popular that it prompted the establishment of a wholly owned subsidiary, along with its own catalog.[38] More importantly, however, Spiegel’s growing focus on women as independent and educated consumers foreshadowed some of the far-reaching socio-economic changes associated with women’s emancipation in the aftermath of World War I. The language of the Spiegel catalog typically addressed women as household decision-makers who were practical, financially savvy, and status-conscious. The clothing line, especially, sought not only to appeal to a woman’s sense of style and economy, but also to convey an image of glitz and glamour. Over the following decades, the Spiegel catalog reflected – or perhaps even helped shape – the identity of the modern American professional woman.

As Spiegel’s customer base grew, extending to twenty-three states and parts of Canada, it became necessary for the company to adapt to new realities. Notable business historians such as Alfred D. Chandler or Richard S. Tedlow have demonstrated at length how rapid growth presents companies with a variety of challenges and dangers, ranging from the need for managerial and administrative changes to new marketing strategies.[39] For Spiegel, May, Stern & Co., one of the most immediate tasks was to refine the company’s credit policies. More variable terms were introduced to reflect the diversity in both customer needs and merchandise pricing; for example, down payment amounts now ranged from thirteen to eighteen percent, and installment plans were extended to sixteen months for more expensive merchandise. Another aspect concerned minimizing the risk of offering credit to so many people across such a large area. The mail-in credit application forms, which were eventually included in every Spiegel catalog, inevitably became lengthier,[40] aiming to screen out as many potential defaulters as possible. The company also tried – without much success – to set up a network of local “agents” to verify credit worthiness and assist in collection or repossession proceedings. However, despite all those efforts, a significant amount of risk would always remain and losses due to defaulting customers were simply unavoidable. Nevertheless, this was more or less successfully factored into the pricing of the merchandise.[41]

Under Arthur’s direction, Spiegel, May, Stern & Co. became firmly established alongside Sears, Roebuck & Co. and Montgomery Ward as a significant player in the mail order industry within only a few years. As a pioneer in the consumer credit market, the Spiegel brand was well-respected, and its methods were soon copied by others. However, the continued growth and success of the company would depend on how well it managed to compete against its much larger rivals. Arthur soon felt overwhelmed. Therefore, in order to further raise Spiegel’s profile and distinguish it from its competitors, he hired advertising expert Edward L. Swikard (1884-1958).

For the next three decades, Swikard’s innovations and advertising campaigns became instrumental in defining Spiegel’s image. As vice president[42] he introduced new enticements such as free-trial offers, customer referral programs, and no-money-down promotions. In 1926, Swikard launched a mass mailing to nine million households, offering a deal on low-cost Congoleum floor covering. The campaign boosted company sales to $16 million and profits to $4 million that year (in 2010 dollars: $197 million and $49.3 million, respectively).[43] Spiegel, May, Stern & Co. continued to experience steady growth, partnering with an ever growing list of suppliers. Arthur Spiegel, meanwhile, began to lose interest in the mail order business after meeting film pioneers Jack Warner and Lewis J. Selznik, and he moved on to a new venture in the burgeoning movie industry after becoming head of the World Film Corporation in February 1916.[44] He died soon thereafter, at the age of only thirty-one, from pneumonia, on April 14, 1916, in New York.[45]

Social Status and Immigrant Entrepreneurship

With the untimely death of Arthur, the Spiegel family had lost its most creative and dynamic member. Modie Spiegel, now forty-five years old, took over from Arthur as president of Spiegel, May, Stern & Co., while continuing to run the Spiegel House Furnishings Company. He was a very wealthy, prominent, and well-connected member of Chicago’s business community by now.  He was also an extremely busy man who not only ran the family business, but also raised his own family while performing civic duties as a member of the Chicago Board of Education.

In March 1897, Modie had married Lena Straus, daughter of the banker Frederic W. Straus.[46] They had four children: three sons, Frederick W. Spiegel (1898-1975),[47] Modie Jr., also known as M.J. Spiegel (1901-90),[48] and John P. Spiegel (1911-91),[49] and a daughter, Pauline Spiegel (1913-76).[50] The family lived in Chicago’s affluent northern suburb of Kenilworth. As he matured and settled down, Modie Spiegel shed much of the youthful exuberance and flamboyance that had characterized his early years as a salesman in “Modie’s madhouse” furniture store; he became more civic minded and politically active, embarking on a long career in Chicago public life. Becoming a trustee of the Chicago Board of Education in 1906, Modie Spiegel would play a significant role in shaping school policies in Illinois for decades to come (for example, thirty years later, he was appointed to the Illinois Education Commission by Governor Henry Horner).[51] His involvement in educational matters is amply documented in the Chicago Examiner, which published almost weekly columns on the board of education’s activities for years. An active supporter of the Republican Party,[52] Modie Spiegel frequently backed progressive initiatives in Chicago’s schools. For instance, he helped set up a relief fund for hungry pupils,[53] advocated for fire safety regulations in public schools,[54] and voted in favor of a ten-percent raise in teacher pay.[55] His sociopolitical stance is perhaps best illustrated by a resolution he submitted to the board in 1908. Combining the traditional German emphasis on Bildung with American patriotism/nationalism, he declared:

The true function of the public schools is to educate pupils on broad lines. The functions of the school board do not entirely cease when sufficient book learning is provided. The true scope of the public school fund is to benefit pupils physically, mentally, and morally. The public schools have a collateral mission besides training pupils. It is their mission to make true Americans of foreign born parents who have children attending public schools. The American public school, besides its normal functions of mental and physical training, teaches patriotism, discipline, industry, and the elements of hygienic cleanliness, to those who need the lessons most.[56]

Modie Spiegel’s involvement and interest in operating the family business began to wane in the mid-1920s, as he groomed his two oldest sons as his successors. In 1928, Spiegel, May, Stern & Co. went public, although the family retained a controlling interest. By 1932, the economic downturn of the Great Depression had forced him to shut down the Spiegel House Furnishings Company. However, Spiegel, Inc. (as the mail order company was renamed in 1937) fared surprisingly well during the depression and actually experienced tremendous growth. Sales rose from $7.1 million in 1932 ($113 million in 2010) to more than $56 million by 1937 ($850 million in 2010).[57] This was achieved by selling cheaper goods and further relaxing the company’s credit policies under the new slogan “no charge for credit” to eager customers. Sales eventually leveled off by 1938 and Spiegel, Inc., refocused on the higher income segment of the market, adding various reputable brand names to its catalog.[58] By 1941, though, the war and rationing basically brought Spiegel’s business to a grinding halt. By that time, the company was firmly in the hands of M.J. Spiegel, and Modie Spiegel had retired. On January 8, 1943, Modie Spiegel died of natural causes at the age of seventy-two.

Despite Modie Spiegel’s great wealth and prominent social status, he and his family struggled to gain acceptance in Chicago’s gentile high society. As Modie’s granddaughter, Holly C. Shulman, states in an article commemorating the life of her mother, Polly Spiegel Cowan, the Spiegels were quite isolated among their snobbish neighbors in Kenilworth. The family was part of the Jewish community and had many Jewish friends, but they did not actively practice Judaism (although they identified with the moral values of Reform Judaism). Eventually Modie and Lena joined Christian Science, but the children were raised in a completely secular environment. Still, Polly was never invited to any parties, dances, or other social events by her Christian peers, and restrictive real estate policies prevented other Jews from moving into the area. In the late 1930s, Nazi anti-Semitism and the outbreak of World War II eventually forced the Spiegels to rethink their German-Jewish identity, and the family tried to locate long-forgotten distant relatives – unfortunately, to no avail. Instead, they decided to do what they could to help Jewish refugees from Europe.[59]

Being members of the German-Jewish community in Chicago and enjoying a number of family connections definitely had its advantages for the Spiegels from the very beginning. Henry Greenebaum, a relative of Joseph Spiegel’s mother (and the brother-in-law of Modie’s sister Sarah), was one of the most important figures in the establishment of Chicago’s German-Jewish Sinai Congregation around 1850. He was a wealthy banker, set up several B’nai B’rith lodges, and became the first Jewish officeholder in Chicago (alderman).[60] When the Spiegels first settled in Chicago, there were around 4,000 Jews in the city. By 1900, that number had grown to around 75,000.[61] German Jews, unlike many of their Eastern European counterparts, were better educated, better off economically, and well-organized in various influential clubs; they continued to hold their religious ceremonies in German and maintained a distinctly secular outlook. The Standard Club, the most prominent German-Jewish social organization in Chicago, featured among its members such illustrious figures as the architect Dankmar Adler, the shoe manufacturer Simon Florsheim, and the banker Charles Schwab. As wealthy and successful Chicago merchants, three generations of Spiegels naturally had a prominent position among the city’s tight-knit business community. Through intermarriage, such as Modie Spiegel’s marriage to Lena Straus of the W.S. Straus banking family, dynastic ties were established or strengthened. It was also common to invest in each other’s businesses or to establish partnerships, such as Joseph Spiegel’s joint ventures with Henry Liebenstein or Jacob Cahn.

German Jews in Chicago typically also maintained relatively close and cordial relations with non-Jewish German immigrants, for example, in the labor movement or in political organizations. On the whole, German Jews generally assimilated into American society very quickly and many ascended the social ranks. Although other ethnic or religious groups sometimes exhibited a somewhat hostile and discriminatory attitude toward them, many German Jews were well-integrated into the political, economic, and cultural life of the city. Chicago’s rapid growth as America’s “second city” and its vibrant business climate in the second half of the nineteenth century helped the entrepreneurial spirit of the resident German-Jewish community greatly. Merchants, especially, benefitted from the constant stream of new immigrants who arrived in Chicago before the First World War. There was always a demand for affordable goods, and coming up with innovative ways to fill that demand (for example, by targeting German immigrants with German-language advertisements in ethnic publications) enabled enterprising minds like Modie and Arthur Spiegel to make a considerable fortune. By 1914, Modie was earning a yearly salary of $35,000 ($788,000 in 2010).[62] Not surprisingly, the Spiegels were rather status-conscious and resided in upscale neighborhoods; they dressed well, had busy social lives, owned cars, and took expensive vacations.[63] The later Jewish immigrant arrivals from Eastern Europe found it much more difficult to make the transition from the Old World to the New. Most Eastern European Jews (the majority of whom came from Lithuania, Russia, and Poland) worked in menial jobs and settled down in the Jewish ghetto around Maxwell Street, where they maintained their accustomed Shtetl lifestyle.[64]

Modie and Arthur Spiegel’s business success was based first and foremost on considerable risk-taking, and on what seems like an almost naïve trust in the honesty and accountability of strangers. The danger that their company would fail due to customers who defaulted on payments or – worse yet – perpetrated outright fraud was not inconsequential. It is perhaps doubtful that Spiegel, Inc., would have ever been able to enter into credit merchandizing and the mail order business had the Spiegels not felt secure and confident enough to take these kinds of risks. Their family ties in the wider German-Jewish community must have provided an adequate safety net (or some other reassurance) for them to undertake these daring ventures. The Spiegels were able to attract a number of investors, and on at least two occasions, in 1888 and 1897, cash infusions helped them to avoid bankruptcy.

Besides the obvious financial risks, Modie and Arthur Spiegel faced other uncertainties on account of the controversial nature of the mail order business in the United States around the turn of the century. Mail order companies like Sears, Roebuck & Co., Montgomery Ward, and Spiegel actually had to overcome widespread skepticism, hostility, and outright resistance to this new method of commerce. For one thing, retailers in villages and small towns regarded the mail order giants as unfair and therefore unwanted competitors, because they undercut prices and generally hurt small businesses. Local merchant associations waged organized lobbying campaigns against mail order companies in various parts of the country, and even went so far as to stage public catalog burnings. Mail order customers also feared negative repercussions in their communities if it became known that they shopped at Sears or Spiegel (for example, there were frequent efforts to intimidate and ostracize individuals who received packages from mail order companies). In order to keep their customers out of trouble, the mail order companies offered to ship merchandise discretely in plain, unmarked packaging.[65]

Another major obstacle for Spiegel’s business model to overcome was the vastly different perception of consumer credit in American society in the late nineteenth century, compared to today. Back then, purchasing an item on credit was widely regarded as dishonorable, even immoral or sinful. This attitude was typically rooted in Puritanical traditions, but it also had much to do with the general distrust of modern city culture in rural areas. Modie and Arthur Spiegel spent considerable time and effort persuading skeptical customers that installment plans and consumer credit were reputable, convenient, and sophisticated methods of trade. Eventually, Spiegel managed to convince many Americans “that life could be much more pleasant – and much more fun – if you obtained the items you needed when you needed them and paid for them as they were used.” Most importantly, the Spiegel “doctrine of credit was directed at small-town America, where it was received as a revelation [and] helped to touch off a revolution in living that would in time lead to lower prices, improved quality, increased comfort – in short, to the affluent society of today.”[66]

Conclusion

Under the direction of Modie’s son and successor, M.J. Spiegel, the company went through various structural transformations, and faced some inevitable economic challenges during the Great Depression and World War II, but it basically remained a family business until 1965. An ill-fated attempt to open up a chain of retail stores was abandoned in the late 1950s. In the 1970s, a subsequent merger with the Beneficial Finance Company proved to be problematic. Ironically, the Spiegel Company, which was originally founded by a German immigrant in the nineteenth century, was eventually bought in 1982 by a German company, Otto Versand GmbH, Europe’s largest mail order firm, based in Hamburg. Under the new ownership of Michael Otto, Spiegel swiftly underwent a complete makeover and became more of an upscale catalog retailer, while expanding and diversifying its business (for example, through the acquisition of the Eddie Bauer retail chain and the First Consumers National Bank). However, the economic downturn of the early 2000s had a devastating effect on Spiegel’s catalog and credit card business, forcing the company to enter into Chapter 11 bankruptcy reorganization in 2003.[67] Today, Spiegel operates as a more or less typical online retailer (now owned by Eddie Bauer Holdings and Commerzbank), focusing entirely on high-end women’s fashions.[68]

Modie Spiegel’s tenure as chief executive, from the 1890s to the 1930s, was in many ways the most dynamic and prosperous phase in Spiegel’s history. Modie Spiegel not only helped oversee the dramatic growth of his father’s small furniture business into one of America’s leading mail order companies, he also laid the foundation for twentieth-century consumerism. Spiegel’s credit retail practices, installment plans, company image, advertising and catalog merchandizing all had a tremendous influence on modern shopping habits, tastes, and branding. In particular, Spiegel’s focus on women as independent and conscientious consumers was revolutionary.

The company’s accomplishments were largely attributable to the Spiegel family’s tight-knit nature, hard work and dedication, risk taking and business acumen, and to their connections and standing within the German-Jewish community of Chicago. As the son of an immigrant entrepreneur, Modie Spiegel was immersed in the family retail business from an early age and inherited a solid foundation on which to build. Under his stewardship, the company expanded steadily but cautiously, achieving considerable financial success and stability. Regrettably, through various mergers and acquisitions, Spiegel & Co. was eventually transformed from a traditional family business into another faceless international corporation. Thus, in the final analysis, the rise and fall of the Spiegel Company mirrors the fate of many other U.S. companies and reflects the broader economic trends of the past few decades.

Notes

[1] Orange A. Smalley and Frederick D. Sturdivant, The Credit Merchants: A History of Spiegel, Inc. (Carbondale, IL: Southern Illinois University Press, 1973), 14.

[2] James Cornell Jr., The People Get the Credit: The First One Hundred Years of the Spiegel Story (Chicago, IL: Spiegel, Inc., 1964), 16.

[3] Smalley and Sturdivant, The Credit Merchants, 4-5.

[4] Cornell, The People Get the Credit, 18-24.

[5] A civilian merchant who sells provisions to an army in the field, in camp, or in quarters.

[6] Smalley and Sturdivant, The Credit Merchants, 12.

[7] Cornell, The People Get the Credit, 27-29.

[8] Dennis Cremin, Chicago: A Pictorial Celebration (New York, NY: Sterling Publishing, 2006), 17.

[9] Cornell, The People Get the Credit, 31-32.

[10] Irving Cutler, The Jews of Chicago: From Shtetl to Suburb (Urbana, IL: University of Illinois Press, 1996), 24-25.

[11] Immigrants from Germany constituted the largest single ethnic group in Chicago in the late 1800s (approximately 470,000 by 1900, or one quarter of the population). Germans from all regional and religious backgrounds had a particular proclivity to organize themselves in Vereinen (i.e., clubs) with a wide range of interests and purposes. Unfortunately, specific information on Joseph Spiegel’s membership in social clubs is not available.

[12] Michael Reese Hospital opened in 1880 on Chicago’s south side. It was built with funds bequeathed to the United Hebrew Relief Association by the wealthy real estate developer Michael Reese (a Jewish immigrant from Bavaria); its mission was to serve all Chicagoans regardless of race, creed, or nationality. See, Wallace Best, “Michael Reese Hospital,” Encyclopedia of Chicago (accessed June 21, 2012)

[13] John B. Jentz, “Furniture,” Encyclopedia of Chicago (accessed June 21, 2012).

[14] I was unable to find any specific information on Modie and Sidney’s upbringing, which school(s) they attended, and whether they spoke any German at all.

[15] Smalley and Sturdivant, The Credit Merchants, 17.

[16] The first Spiegel furniture catalog of 1888 consisted of 103 pages and was offered to customers who paid 15 cents per copy in postage. The decision to issue a catalog appears to have been a response to similar advertising campaigns by Spiegel’s local competitors.

[17] For a comprehensive overview of Singer’s innovative sales and marketing practices, see: Andrew Godley, “Selling the Singer Sewing Machine around the World: Singer’s International Marketing Strategies, 1850-1920,” in Enterprise and Society, vol. 7, number 2 (2006): 266-314.

[19] Cornell, The People Get the Credit, 45-48.

[20] Chicago’s nickname as “the windy city” originated in the 1880s, in reference to its reputedly long-winded, boastful, and self-promotional politicians. See Eric Zorn, “For Our Out of Town Guests: Why Chicago is Called ‘the Windy City,’” Chicago Tribune, July 17, 2006.

[21] Joseph Spiegel remained actively involved in the family business until his death in 1918. In terms of personality, he was more like Sidney and tended to avoid the melodramatic sales tactics introduced by Modie. His role was mostly supervisory in nature.

[22] Cremin, Chicago, 10.

[23] Spiegel advertisement, Chicago Daily Tribune, April 12, 1903.

[24] Smalley and Sturdivant, The Credit Merchants, 34-35.

[25] Cornell, The People Get the Credit, 53.

[26] Smalley and Sturdivant, The Credit Merchants, 38. All current values (in 2010 USD) are based on Samuel H. Williamson, "Seven Ways to Compute the Relative Value of a U.S. Dollar Amount, 1774 to present," MeasuringWorth, 2011, using the Consumer Price Index.

[27] “May, Stern & Co. Sell Out,” Chicago Daily Tribune, January 1, 1903.

[28] Cornell, The People Get the Credit, 50.

[29] Smalley and Sturdivant, The Credit Merchants, 43-44.

[30] Montgomery Ward and Sears, Roebuck & Co. had been in the mail order business since 1872 and 1886 respectively, generating tens of millions of dollars in revenues annually, but neither company offered its clients credit or convenient installment plans at the time. The Sears, Roebuck catalog, for example, explicitly stated “our only terms are cash in full with all orders.” See The 1902 Edition of the Sears, Roebuck Catalogue (New York, NY: Gramercy Books, 1993), 3.

[31] The actual volume of business of Spiegel, May, Stern & Co.’s little mail order department in 1904 is unknown. See Smalley and Sturdivant, The Credit Merchants, 45.

[32] Cornell, The People Get the Credit, 59-61.

[33] Funding Universe Corporate Histories: Spiegel Inc.

[34] Mark R. Wilson, “Spiegel Inc.,” Encyclopedia of Chicago, http://www.encyclopedia.chicagohistory.org/pages/2857.html (accessed August 16, 2011)

[35] Cornell, The People Get the Credit, 61.

[36] Funding Universe Corporate Histories: Spiegel Inc.

[37] Mark R. Wilson, “Spiegel Inc.”

[38] Cornell, The People Get the Credit, 67.

[39] See Alfred D. Chandler, Strategy and Structure: Chapters in the History of the American Industrial Enterprise (Cambridge, MA: MIT Press, 1969), and Richard S. Tedlow, New and Improved: The Story of Mass Marketing in America (Cambridge, MA: Harvard Business School Press, 1996)

[40] By 1920, the standard Spiegel credit application consisted of fifteen questions, which included new categories such as previous address, race, other credit accounts, and amounts owed. See

Smalley and Sturdivant, The Credit Merchants, 86-87.

[41] Cornell, The People Get the Credit, 70-71.

[42] Swikard’s importance to the company is also demonstrated by his salary, which was equal to that of Modie Spiegel himself. In 1935, Swikard earned $47,400 ($753,000 in 2010). See “Earnings of Executives Bared By Treasury,” Chicago Tribune, January 15, 1937.

[44] “News of the Financial World,” Chicago Daily Tribune, February 1, 1916.

[45] Arthur H. Spiegel, Millionaire at 31 by Own Efforts, Chicago Examiner, April 16, 1916.

[46] “Weddings Past and Yet to Come,” Chicago Daily Tribune, March 28, 1897.

[47] Frederick W. Spiegel worked for the family business from 1920 until his retirement. He married Clara Gatzert in 1923 and had two children. They were divorced and he later married Ruth Hirsch in 1949. He served in the American Red Cross ambulance service in 1918 and received the Italian Croix de Guerra. In World War II, he was captain in the U.S. Army Air Corps. He died in Chicago in 1975. http://www.newberry.org/collections/FindingAids/spiegelhemingway/spiegelhemingway.html (accessed August 27, 2011)

[48] M.J. Spiegel joined the family business after graduating from Dartmouth College in 1922. He became general manager in 1932 and president in 1939. Under his leadership, the company expanded into scores of retail outlets in the mid-1940s. He retired in 1970 and devoted himself to his passion for horse racing. M.J. Spiegel and his wife, Carolyn, had two children. See "Modie J. Spiegel, 89, Mail Order Executive," New York Times June 28, 1990 (accessed August 26, 2011).

[49] John P. Spiegel did not follow in his older brothers’ footsteps by entering the family business. Instead, he studied medicine at Northwestern University, and became a nationally renowned social psychiatrist, conducting research on violence as part of war, the inner city, and the family. He later taught at the University of Chicago as well as at Harvard University, and practiced medicine at Michael Reese Hospital. Kenan Heise, “John P. Spiegel Obituary,” Chicago Tribune, July 19, 1991.

[50] Pauline (“Polly”) Spiegel Cowan attended Sarah Lawrence College in New York and became a radio and television producer, as well as a political activist. Her most famous radio show was called “Conversation,” and her best-known television show was a literary quiz show called “Down You Go.” She became a member of the National Council of Negro Women’s board of directors in the 1960s. She married Louis G. Cowan and had four children. Polly and her husband died tragically in a house fire. http://www.history.uh.edu/cph/WIMS/creation/sub-Leadership-PC.html (accessed August 27, 2011)

[51] “Modie Spiegel, Mail Order Firm Chairman, Dead,” Chicago Daily Tribune, January 9, 1943.

[52] One article in the Chicago Examiner, for example, mentions his attendance at a Republican Party banquet in 1909 (Chicago Examiner; January 15, 1909); another, in 1912, lists him as a supporter of W. H. Taft (Chicago Examiner, February, 6, 1912). 

[53]Chicago Examiner, October 4, 1908.

[54]Chicago Examiner, June 8, 1909.

[55]Chicago Examiner, December 20, 1909.

[56]Chicago Examiner, May 21, 1908.

[57] Funding Universe Corporate Histories: Spiegel Inc.

[58] International Directory of Company Histories: Spiegel Inc.,

[59] Holly C. Shulman, “We Remember – Polly Spiegel Cowan: Civil Rights Activist, 1913-1976,” in Jewish Women’s Archive, 2004. http://jwa.org/weremeber/cowan

[60] Cutler, The Jews of Chicago, 18.

[61] During Modie Spiegel’s lifetime, from 1871 to 1943, the Jewish population in Chicago rose from 4,000 to over 290,000. See Cutler, The Jews of Chicago, 269.

[62] Smalley and Sturdivant, The Credit Merchants, 55.

[63] In 1910, for example, Modie Spiegel and his family went on a vacation to France, where they were nearly killed in an automobile accident after colliding with a horse-drawn wagon. Modie Spiegel suffered a fractured collar bone and severe cuts to his face and throat. Chicago Examiner, July 1, 1910.

[64] Cutler, The Jews of Chicago, 41-55.

[65] Smalley and Sturdivant, The Credit Merchants, 50-51. See also The 1902 Edition of the Sears, Roebuck Catalogue, 3.

[66] Cornell, The People Get the Credit, 61.

[67] Wilson, “Spiegel, Inc.”

 

Cite this Entry

APA Style

"Modie J. Spiegel." (2014) In Immigrant Entrepreneurship, Retrieved November 23, 2014, from Immigrant Entrepreneurship: http://www.immigrantentrepreneurship.org/entry.php?rec=140

Chicago Style

Kopp, Frederic. "Modie J. Spiegel." In Immigrant Entrepreneurship: German-American Business Biographies, 1720 to the Present, vol. 3, edited by Giles R. Hoyt. German Historical Institute. Last modified February 18, 2014. http://www.immigrantentrepreneurship.org/entry.php?rec=140

MLA Style

"Modie J. Spiegel," Immigrant Entrepreneurship, 2014, Immigrant Entrepreneurship. 23 Nov 2014 <http://www.immigrantentrepreneurship.org/entry.php?rec=140>

Modie Spiegel Portrait

  • Spiegel Catalog Cover, 1920
  • Joseph Spiegel Portrait
  • Modie and Arthur Spiegel
  • Marcus Spiegel Portrait
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