Isidor Straus

Introduction

Isidor Straus (born February 6, 1845, Otterberg, Rhenish Palatinate, Bavaria; died April 15, 1912 on board RMS Titanic at sea in the North Atlantic) is best known as an owner and manager of the R.H. Macy department store in New York City. During his lifetime he was equally well known as an owner and manager of the Straus family’s large china and glassware importing business, L. Straus & Sons, also located in New York City. As a businessman he was successful in monetary terms, leaving an estate of $3,859,514 (approximately $89.5 million in 2010$), which included shares he owned in Macy’s, the Abraham & Straus department store, and L. Straus & Sons.[1] He also served as a director of Hanover National Bank and other financial institutions, president of the Retail Dry Goods Association from 1908 until his death, president of the Pottery and Glassware Board of Trade, and vice-president of the New York City Chamber of Commerce. Beyond his financial worth, his success can equally be measured by his civic activities in New York City, which included work on commissions to build bridges and bring the World’s Columbian Exposition to the city, as well as his charitable efforts within the Jewish community and his prominence in Democratic Party politics.[2] A model of the sober and judicious businessman, he was influential and respected for both his public accomplishments and his private integrity.

Family and Ethnic Background

Isidor Straus was born on February 6, 1845, in the village of Otterberg in the Rhenish Palatinate, an administrative region of Bavaria on the west bank of the Rhine River that had been under French control from 1797 until 1816. He was the eldest of four children. His parents Lazarus (1809-1898) and Sara Straus Straus (1823-1876) were rural landowners and seed and grain dealers. The family was well respected in the village. Lazarus’s paternal grandfather had been chosen by Napoleon Bonaparte as a member of the Sanhedrin, a council of Jews Napoleon formed to advise him on the emancipation of Hebrews living under his rule. Continuing in his grandfather’s footsteps, Lazarus was a learned and philosophical man. He was a supporter of the 1848 liberal revolution in the German states, raising money, recruiting revolutionaries, and hosting Carl Schurz and other leaders when they came to Otterberg.[3]

Due to the general financial instability that followed the failed revolution of 1848, Lazarus’ seed and grain business went bankrupt. In 1852, at the advanced age of forty-three, he immigrated to the United States, landing in Philadelphia. At the advice of fellow immigrants from his home village, he traveled to Oglethorpe, Georgia, where he teamed up with peddler Julius Kaufman who owned a wagon. Kaufman was originally from Baden, but the Straus family had known him before Lazarus immigrated to the United States. A short time later, the men rented a small store in Talbotton, Georgia, the county seat of Talbot County and the commercial center of an area of prosperous cotton plantations where more than half the population was enslaved. Among the town’s attractions to Lazarus, who believed in education, was a private school for boys and another for girls. Because Lazarus knew a number of wholesale merchants in Philadelphia who were also immigrants from Otterberg, he was able to obtain merchandise on credit for his store in Talbotton. Lazarus’ mercantile business thrived and he made additional profits by selling cotton, some of which he likely took as payment for merchandise and the rest of which he handled on commission for plantation owners.

Sara Straus and the couple’s four children arrived in New York in 1854 and traveled to Georgia to reunite with Lazarus.[4] Isidor was nine when he set foot in the United States. The Straus family swelled the tiny ethnic minority of Talbotton’s population which, apart from slaves, was overwhelmingly American-born and of British descent. In addition to making up about a third of the German immigrants in the town, they were the only Jewish household. Isidor, who had probably acquired an elementary education in Germany, enrolled in the Collinsworth Institute in 1856, attending classes there for five years until the outbreak of the Civil War. Unlike his two brothers, Nathan, who attended Packard’s Business College in New York, and Oscar, who graduated from Columbia College and studied for the bar at Columbia Law School, Isidor had no further formal education beyond his pre-war schooling.[5]

When the Civil War began in 1861, Isidor sought a military career but was rejected by Confederate recruiters because of his youth. Later that year, he visited the Georgia Military Academy as a prospective student. Students there played a prank on him by dumping water on his head as he went through a doorway. He was so insulted by this that he lost interest in the school and turned to business to salve his bruised ego. In his autobiographical reflections, he wrote: “I hired a buggy with a driver, and visited a mill which was situated a few miles away and made a contract for the delivery to me of some of the mill’s product, on which I made a very good turn, and thus became embarked on a mercantile career, which has been my occupation ever since. To the best of my recollection, I went to Atlanta the following day, sold for future delivery what I had contracted for at the factory the previous day, and embarked in other [successful] transactions.”[6] Only sixteen years old, Isidor already showed evidence of how important business success was to his self-esteem.

In 1863 the Straus family moved to Columbus, Georgia, after a Talbot County grand jury issued a statement chastising Jewish merchants for their disloyalty to the rebellion, specifically blaming them for rising prices. Although local leaders, as well as the grand jury members, pleaded with him to stay, Lazarus refused. Characteristically, neither he nor his family would tolerate anti-Semitism, a growing phenomenon in the South during the Civil War.[7] Columbus was not only a central supply depot for the Confederate Army, second only to Richmond, Virginia, but also had a Jewish community and a temple. Isidor, however, spent little time there. He became secretary to Lloyd Bowers, an agent charged with raising money for the Confederacy by selling government bonds in England. In 1863 Isidor boarded a ship in Charleston bound for Liverpool which successfully ran the Union blockade as he lay hidden with $1,200 in gold sewn by his mother into his undershirt, plus about $1,500 (approximately $26,900 in 2010$) in bills which he was to collect for his father. After a delay of several months spent with relatives in Otterberg, Isidor settled in England and again proved his financial acumen in deal making. Within a week-long period in 1864, for example, he shipped back packages to Georgia valued at $130,000 (approximately $2.33 million in 2010$).[8]

As a trusted aide to his business associates in the Confederacy, Isidor was given several missions beyond the ability of most nineteen year olds. One involved tracking down, across Europe and back to the Americas, a man who had absconded with a $20,000 (approximately $286,000 in 2010$) letter of credit intended for the purchase of Confederate supplies. The other mission required him to sail to Cuba to dispose of Southern steamships idled by the blockade in Havana. However, Isidor claimed that a turning point in his life occurred when he engaged in a couple of private bond selling ventures abroad which failed, costing him thousands of dollars and curing him of “all speculative tendency” for the remainder of his life.[9]

At the end of the war in 1865, Isidor was reunited with his family whose business in Columbus had been destroyed, although Lazarus still had some cotton in a Columbus warehouse which Isidor later sold for him in England. The family left the South and intended to settle in Philadelphia, but Isidor convinced them to move to New York City instead. He purchased a house for the family on West Forty-Ninth Street with money he had accumulated during the war. After the family’s arrival in New York, Isidor prepared to embark on his adult business career. He joined his father as a partner in a new business venture and in 1871 married Rosalie Ida Blun, daughter of a German-Jewish merchant in New York City whom he had met through a Straus family friend in 1863 when he was en route to England.[10]

Business Development

Isidor Straus’ business career is entwined with that of his brother Nathan (1848-1931) with whom he was an equal partner in Macy’s, as well as in L. Straus & Sons. Despite possessing entirely different personalities and abilities, they shared the management and direction of both businesses. Like Isidor, Nathan had showed early initiative and ability in business. He had worked in his father’s store, as had Isidor, and was always thinking up schemes to make money. As a teenager he had developed a small business collecting and selling scarce hemp rope and scrap copper, making enough money to buy a pony. During the Civil War he had made trips for an express company and in 1865 was in charge of a wagon train with valuable cargo traveling 100 miles from Columbus to Macon, Georgia, with Union troops not far behind him. After the Straus family arrived in New York City, Nathan joined his brother in his business activities.[11]

At least half of both brothers’ mature business careers were spent with L. Straus & Sons. The family business was not only the means of introducing the Strauses to Macy’s and the department store industry, it was the business which bore the family name and provided the financial means for the family’s eventual acquisition of Macy’s and establishment of part-ownership of the Abraham & Straus department store.[12]

L. Straus & Sons

In 1866, about six months after the family moved to New York City, Lazarus Straus established L. Straus & Son with Isidor as his sole partner. The business initially centered on jobbing basic chinaware acquired from importers in New York City, the Strauses likely supplying small general stores in the South where demand was high and such goods were hard to get.[13] When Nathan Straus and Lazarus Kohns, husband of Nathan’s and Isidor’s sister Hermine (1846-1923), joined the firm in 1873, the name was changed to L. Straus & Sons. Isidor’s and Nathan’s younger brother, Oscar (1850-1926), joined the company in 1881.[14]

It is well known that L. Straus & Sons opened a chinaware and glassware department in Macy’s department store and eventually took over the entire store, but how that came about as part of L. Straus & Sons’ wider business strategy has not been explored. Nor has L. Straus & Sons’ strategy been assessed in conjunction with major changes taking place in retailing and wholesaling, particularly in the context of the economic depression of the 1870s. The growth and development of L. Straus & Sons, which led to the acquisition of R.H. Macy & Company, represents the former’s adaptation to adverse and changing economic circumstances that resulted in diversification and vertical integration of the core business.

The small company established by Lazarus and Isidor Straus in 1866 was successful from the start and in 1869 moved from 165 Chambers Street into larger quarters on Warren Street in Lower Manhattan. For the first few years, the Strauses dealt in inexpensive crockery which they obtained from importers in New York City. American potteries were scarcely in operation when the Strauses began their business, but in the 1870s domestic pottery producers began making basic earthenware. As a consequence, the Strauses began to expand their inventory, hiring William J. Burdett to handle art goods. The Strauses also had to adapt their business practices to cope with a changing market for their products. Large stores such as Macy’s were beginning to buy directly from manufacturers and importers. Consequently, the Strauses also cut out the middlemen and began importing goods directly from European sources, particularly England and France. In addition to china and glassware they imported sterling silver, bronzes, clocks, and mantle ornaments.[15] They also branched into retailing by opening a “store,” as it was initially called, inside Macy’s.

Macy’s was a well-established retailer by 1874 when Nathan Straus approached Rowland H. Macy about installing a Straus china and glassware department in his store. Previously Macy’s had handled this sort of merchandise only incidentally and mainly at Christmas. William J. Burdett, an employee of L. Straus & Sons, with a staff of six female clerks, took over management of the 1,800 square-foot basement department which was immediately successful. The incorporation of the new department represented not only vertical integration for the Strauses but diversification for Macy’s, a practice which the store had been pursuing since the 1860s as a hedge against the unpredictability of post-Civil War business conditions.[16]

The Macy’s venture represented only one of the Strauses’ numerous forays into retailing. In 1876 they opened a wholesale showroom and retail store in Philadelphia, probably choosing this location because of the crowds attending the Centennial Exposition and because it was more accessible to Southern buyers than New York City. After the store failed in 1878, the Strauses contracted with John Wanamaker to move their stock into his Philadelphia department store. During the 1880s and 1890s, L. Straus & Company would run similar departments in department stores in Boston (R.H. White and Jordan Marsh), Chicago (J.H. Walker and Mandel Brothers, successively), Baltimore (Joel Gutman), Philadelphia (Strawbridge & Clothier, following a contract dispute with Wanamaker’s), Washington, D.C. (Woodward & Lothrop), and Brooklyn (Wechsler & Abraham). A plan to operate a department in the Siegel-Cooper department store fell through. There may have been other retail ventures as well.[17]

Beginning in 1879, the Strauses’ company, while continuing to import from a variety of manufacturers in Europe and Asia, moved into direct manufacturing with the opening of china and glass factories in Rudolstadt, Germany; Limoges, France; and Steinschönau and Carlsbad, Bohemia (now Kamenicky Senov and Karlovy Vary, Czech Republic). They also expanded into cut glass manufacturing. By 1882 they had built a glass cutting facility inside Macy’s and in 1889 they established a factory in New York City where artisans cut designs into blanks imported from Cristalleries de Baccarat in Paris. Over time they established and operated a number of glass cutting factories in the New York metropolitan area.[18]

L. Straus & Company diversified their business activities during this era by taking custom orders for imprinted china and glassware for hotels and restaurants. They also began to sell their wares wholesale to other types of retailers, such as jewelry stores that had started carrying art pottery in response to competition from department stores that had added fine jewelry departments. Thus the Strauses were able to play both sides of the fence, contributing to the development and merchandise diversification of department stores while also benefitting from the big stores’ impact on small, single-line stores. In a similar vein, they hired an experienced chinaware retailer, whose own business had been crushed by department store competition, to manage their department at Wechsler & Abraham (later Abraham & Straus).[19]

In the 1880s the L. Straus departments in Macy’s, which included a crockery and glass department in the basement and an art pottery department on an upper floor, constituted the importer’s primary account.[20] In 1894, however, two years before the Strauses became sole owners of Macy’s, Isidor predicted an uncertain future for china importation, writing to Nathan’s two German brothers-in-law who managed the Carlsbad factory, with “the change in the tariff the prospects are that our [presumably Macy’s] importation of dry goods will increase to a marked extent and, hence, will become a much more important branch, at least, so far as the service of one of you are concerned, than the china. The china business is in such a shape that no house which entirely depends upon it can make much headway, even when conducted on the most economical plan, and with the shrewdest sagacity.”[21] In 1899 L. Straus made a major change in how they conducted business, revealing again the impact of the direct buying practices of large retailers as well as the failure of small shops. They eliminated their traveling sales force, instead selling through their showrooms, possibly those in department stores.[22] While not abandoning the china and glassware trade—Macy’s would have a very large department for decades to come—Isidor and Nathan correctly sensed that large-scale general retailing offered a more promising future.

R. H. Macy & Company

From 1874 until 1888 the Strauses’ involvement with Macy’s was limited to running their departments within the store. Rowland H. Macy died in 1877, and new management took over briefly before Charles B. Webster and Jerome Wheeler assumed control of the company. Then in 1888, with the impending retirement of Wheeler, Webster asked Isidor and Nathan to become partners in the business. At that time the Strauses’ departments were contributing a significant sum to the store’s total sales, about thirteen percent. Isidor and Nathan accepted Webster’s offer and paid “$235,000 [approximately $89.5 million in 2010$] in cash, plus three notes of $70,000 [approximately $1.66 million in 2020$] each, due at 12-month intervals at 6 per cent interest” for their forty-five-percent share of the business.[23] The cash was a loan from L. Straus & Sons. Isidor later claimed that it had not previously occurred to him or Nathan to buy into the store. They were, in fact, the first “outsiders” to hold a financial interest in it. Prior to their partnership, all of Macy’s partners had had familial ties with founder Rowland Hussey Macy. In light of the anti-Semitism of the times it is also worth emphasizing that the Strauses were Jewish immigrants with Southern ties, not native-born Yankees, which made them true outsiders in the business.[24]

At the time the Strauses became partners, Macy’s was a booming business with about 2,100 employees. On a really good day the store enjoyed sales approaching $100,000 (approximately $2.37 million in 2010$); annual sales were about $5 million (approximately $118 million in 2010$). An actual count established that on a single day in 1889 over 60,000 people entered the store. Well located in terms of public transportation, Macy’s drew customers from Manhattan, Brooklyn, Jersey City, Hoboken, and Newark, as well as up and down the Hudson River Valley and through Connecticut and Long Island. It was known internationally and was recognized in 1891 as “the largest and best known” of New York City’s big Sixth Avenue bazaars.[25]

The brothers continued to hold their positions at L. Straus, then the world’s largest crockery firm, doing a business of about three million dollars annually (approximately $73.3 million in 2010$).[26] Isidor, however, moved his office into the Macy’s store at Fourteenth Street and Sixth Avenue and focused on the store’s finances. Nathan, never happy for long behind a desk, inaugurated new departments and handled displays, advertising, and public relations for the firm. Although many considered Isidor the chief executive of Macy’s, Nathan occupied an equally critical, and perhaps more creative, role. At the same time, because of Nathan’s appointment as New York City Park Commissioner in 1891 and his philanthropic activities including poor relief in the 1890s, Isidor was probably more consistently involved in running the store than his brother.[27]

In their new executive roles commencing in 1888, Isidor and Nathan made no major changes to Macy’s operations. They basically steered the store on the course set by its founder, while adapting to changing business conditions and to the emergence of a department store industry both within the United States and internationally. They largely continued to follow R.H. Macy’s basic business strategy when they increased their ownership share to fifty percent in 1893 and when they acquired sole ownership in 1896 after Charles Webster departed from active management. The Strauses paid Webster $500,000 (approximately $13.4 million in 2010$) in cash for his share of the company and made semi-annual installment payments for the remaining $700,000 (approximately $18.8 million in 2010$).[28]

The Strauses attracted customers to Macy’s by claiming that the store had the lowest prices in New York. The store’s merchandise may not have always been the finest in the marketplace but it was of acceptable quality, marked with a fixed price, and advertised honestly, thus winning the trust of the public. Profits depended on high sales volume and rapid stock turnover. Buying and selling was done on a cash basis, with no credit given to any customers, a policy which permitted a relatively small capital to be reinvested over and over. As Isidor’s son Percy Straus explained in 1922, this policy, which became a characteristic of modern retailing, was set by Rowland Macy when he came to New York in 1858 without capital. Percy noted, “Unless your capital is very large you cannot buy for cash and sell on credit. And Macy had little capital. It was a novel policy in the fifties. People were accustomed to buying on credit and paying semi-annually, or, at the most, quarterly.”[29]

Many stores adopted the cash-only policy in the later nineteenth century. What is remarkable about Macy’s is how long the store stuck with the policy. By around 1910, when most merchants collected credit payments monthly from customers and when paying on credit was a sign of a customer’s financial stability rather than their poverty, most stores had abandoned the cash-only policy and granted charge accounts to their preferred customers. Macy’s, however, continued to accept only cash payments until 1939 when the store instituted a time-payment plan.[30] The cash policy served them well, generally, although their customers’ inability to pay for expensive merchandise without credit was one reason the store was forced to close down its turn-of-the-century piano department after only a few years.

In addition to continuing Rowland H. Macy’s cash policy, the Strauses steadfastly refused to follow the common practice of granting discounts to buying agents who bought frequently, and in quantity, on behalf of others. They would not offer inducements, usually in the form of a five-percent discount, to servants purchasing merchandise for an employer, nor to ministers, teachers, or dressmakers. Rowland Macy’s odd prices—seventeen cents, fifty-nine cents—also survived under the Strauses, who claimed to arrive at their selling prices by applying a uniform percentage increase to the sum of the merchandise’s purchase and selling costs, the price totaling any odd number it might.[31]

Keeping prices low and arriving at them with a set formula meant that Macy’s often rejected manufacturer’s list prices in favor of lower ones. The Strauses’ practice of underselling brought the store into serious conflict with suppliers of branded merchandise around 1900.[32] By that time manufacturers had developed trademarks and had begun engaging in national advertising in order to stimulate demand by winning consumer loyalty for their products. They became more protective of their prices and attempted to enforce “our price or else” deals with retailers.[33] The price struggles between retailers and manufacturers involved many stores other than Macy’s, but it was, perhaps, one of the retailers most dedicated to engaging in prolonged struggles in the courts. During the eleven years in which the store was cut off by publishers due to the store’s refusal to sell books at publishers’ list prices, Macy’s took a defiant stand against the restrictions imposed upon them, posting signs over their book counters, such as one that said the “book trust has not yet driven us out of business.” Similar struggles took place in other American stores, as well as in German department stores. Macy’s showed the same ingenuity in obtaining stocks of books as they did with other merchandise that was denied to them by manufacturers. Macy’s book-buyer, E. Lillian Kinnear, found friends, relatives, jobbers, and even bookshop owners who would buy for her, for a commission, even under the risk that they might be discovered (as some were) and cut off by publishers as a result. With a special bank account set up by the store, she personally purchased the books and then resold them to Macy’s for a lump sum, leaving no accounting record of her suppliers, nor the cost of individual books. She also created bookshops in other cities, stocking them and then shipping all the books to Macy’s.[34]

Although Macy’s did sell some merchandise at manufacturers’ list prices, the store battled with makers over many brand-name products besides books, including rugs, shirts, gloves, silks, and sports equipment. Macy’s was cut off from obtaining Singer sewing machines and Stetson hats, and refused to accept manufacturers’ terms for Waterman pens, Spaulding tennis rackets and golf balls, and Edison phonographs and records. Not long after Isidor’s death, when the store was under the control of his sons, Macy’s spent three years in the courts before winning the right to establish prices on products of the Victor Talking Machine Company. Macy’s battles regarding price maintenance—which they characterized as fighting the trusts for the benefit of the consumer—were backed by other large retailers who also wished to sell for whatever price they deemed best. The store’s victories against price maintenance have been hailed as one of Macy’s greatest contributions to retailing.[35]

Another tactic Macy’s used to keep prices low was to manufacture merchandise under their own brands, some of which was also sold at Abraham & Straus after the Strauses bought a share in 1893. In 1897 and 1898 Macy’s factories produced not only china and glassware, but also cigars, linens, flags, bicycles, mattresses and pillows, candy, perfumes and toiletries, baking powder, horse harnesses, men’s shirts and tailored goods, women’s underwear, skirts, blouses, and robes.[36] Macy’s and other department stores that engaged in manufacturing eventually stopped the practice in the twentieth century, with the exception of some drugs and toiletries. Macy’s, however, continued stocking its own house brands, though the merchandise was usually manufactured by others.

As a retailer that stressed low prices, Macy’s avoided “frills” such as concerts, exhibits, and lectures which some stores featured as a way to lure shoppers and build goodwill. Neither the old nor the new store was known for fashion, eschewing custom dressmaking salons, seasonal openings, and fashion shows. The Sixth Avenue store had no auditorium. The new Herald Square store, which opened in 1902, had one on the top floor, but it was soon converted into the mail order department. The new store was built without a glass-ceilinged atrium which characterized most department stores of that time. Despite how they sacrificed floor space, atriums provided an elegant method of bringing light into store interiors. Macy’s chose instead to equip the new store with the best in modern electrical lighting, a decision that resulted in a prosaic, yet more efficient, physical plant.[37]

As partners, and then full owners of Macy’s, the Strauses saw the company’s sales volume double from 1888 through the opening of Macy’s new Herald Square store in 1902. They made close to eleven million dollars (approximately $288 million in 2010$) in gross sales in 1902 when the bulk of their business was still on Fourteenth Street. This figure represents a respectable gain but is not spectacular and probably reflects both competition from Henry Siegel’s Big Store on Sixth Avenue, which opened in 1896, as well as the limited capacity for Macy’s to expand.[38] In part this was due to the addition of new departments, such as bicycles (1891); groceries, wines and teas (1892); stringed instruments (1893); lawnmowers (1894); photographic supplies (1895); liquors (1895); furniture (1896); pianos and wallpaper (1898); optical goods (1899); and nursery furniture (1902). To put the growth in context, it is important to realize that these were years in which consumer buying power grew and all department stores, then the dominant form of urban retailing, expanded their stores and merchandise lines. As the economy improved following the economic depression of the early 1890s, the public enjoyed rising incomes and the fruits of an expanding manufacturing economy. Automobiles, which would later consume a major part of family budgets, were not yet affordable to lower and middle-class buyers, so consumers devoted their disposable income to purchasing clothing, household goods, and luxuries such as cameras, bicycles, and packaged groceries, all of which were carried by department stores at the time.

As the nineteenth century came to an end, the owners of Macy’s faced two interrelated decisions: whether to relocate their store, and if so, to where. From its founding in 1858 as a small, fancy goods store on Sixth Avenue just below Fourteenth Street, Macy’s had grown constantly, at first by extending horizontally into neighboring buildings, then vertically in modest increments of a floor or two. But the expansions never quite kept pace with the store’s needs and the building came to resemble a hodgepodge. Even with a six-story addition in 1891, the store remained overcrowded. Another building on Thirteenth Street was incorporated in 1893. In 1896, upon taking sole ownership of the store, the Strauses opened a six-story annex on West Fourteenth Street opposite the main store that contained men’s and boy’s departments as well as sporting goods and furniture. In 1899 the Strauses were still improving their old location, receiving permission in November from the New York City Board of Aldermen to erect a bridge to connect the store with the elevated railway station stop at the corner of Sixth Avenue and Fourteenth Street.[39]

The enlargements and improvements of the 1890s did not obviate the need for a new store, either in the same location or a new one. The Macy’s store was at the southern end of a shopping district that had been moving northward for some time, a trend launched far back in 1879 with Stern Brothers’ successful move to Twenty-Third Street. The store’s biggest rival, the Siegel-Cooper Big Store, fronted on Sixth Avenue four blocks to the north. In the same area were B. Altman, Simpson & Crawford, and several other established dry goods stores. Nathan began negotiations for a large plot of real estate at Forty-Fifth Street in 1895 but failed to secure the property. In 1897 pressure increased when an insurance journal declared that “a genius could not have arranged a death-trap more effective than the store of R.H. Macy & Co. in case of a fire and consequent panic, and it is probably the most dangerous of all the monster stores in the city.”[40] With key leases for the store set to expire in 1903, a decision about the status of Macy’s soon became necessary.[41] Isidor considered building a new store at the present site. He tried to negotiate with property owners to gain enough land to build at the old location but found them unreasonable in their demands, so in 1900 he and Nathan authorized Isidor’s sons Jesse and Percy to look for a new site. They chose Herald Square at the intersection of Thirty-Forth Street, Broadway, and Sixth Avenue, about a mile north up Sixth Avenue from Fourteenth Street. Using an agent, the Strauses began quietly buying up properties.

In retrospect, had the store not moved north it would probably not have survived. Nonetheless, at the time it was a daring move that challenged the idea that retailers had to congregate in a well-defined district. When Macy’s decision to move to Herald Square became public in the spring of 1901 realtors called it “the most important real-estate deal negotiated in years” principally because it was expected to revitalize a neglected and undervalued part of the city.[42] The real estate world mused that the Strauses had chosen that area because it was a good buy.[43] The area had been anticipated to develop into a theater and hotel district, but the hotels were slow to appear, while Koster & Bial’s Music Hall, which abutted the properties acquired by Macy’s and which they would shortly acquire, had grown seedy and run down. Opinion was that the future razing of the thirty-four standing buildings on the site and the construction of Macy’s could only improve the value of adjacent properties even if it failed to shift the center of the shopping district northward.

The new site was well situated with regard to public transportation. Like the old location, it was on the Sixth Avenue elevated railroad, which would soon replace sooty steam engines with cleaner electric-powered ones. Four north-south surface trolley lines crossed two east-west lines at Herald Square. In 1901 the public learned that the chosen route of the Pennsylvania Railroad would mean that a station would be built between Thirty-First and Thirty-Third Streets at Seventh and Eighth Avenues. This was wonderful news for Macy’s, which would benefit from new traffic from New Jersey and New England. In 1902 the Rapid Transit Commission approved plans for a subway extension from Forty-Second Street down Broadway to Fourteenth Street with a station stop right outside Macy’s.[44] Thus what at first looked like a risky location blocks north of Twenty-Third Street, soon seemed ideal, though in fact neither the Strauses nor anyone else knew the location of the new Penn Station until after the Macy’s site had been chosen.[45] Macy’s, in fact, did well but not spectacularly from 1907 until the time Isidor’s sons, Jesse, Percy, and Herbert, assumed control of the store, enlarged it, and took it to new heights of profitability.[46]

Personality and Social Status

Isidor Straus was a dignified and respected figure in the New York business and social community, the Jewish community, and the national political community. Along with Nathan, a philanthropist, and Oscar, appointed minister to Turkey in 1887 and Secretary of Commerce and Labor under Theodore Roosevelt, he had come to be regarded around the turn of the century as one of the “remarkable” Straus brothers. Displaying a high sense of honor, rectitude, and a dedication to rational self-interest, he could be characterized as “bourgeois with a vengeance.” He had a retiring personality and seemed to have few interests outside of work and the study of issues related to tariffs and monetary policy. Whereas Nathan Straus was for many years identified closely with his prize-winning horse Majolica, Isidor had none of the hobbies so often associated with wealthy men of his era. Also unlike Nathan, a “people person” and well-known benefactor of the poor, Isidor was not known to the public. The closest Isidor came to being a popular, sentimental figure occurred in the public’s reaction to his death on the Titanic in 1912.

He became known in business circles in the 1880s because of his stand on low tariffs, a vital issue to the many importing firms in New York City. He argued in 1882 that tariffs on imported glass and pottery ought to be reduced from the high levels they had attained in the post-Civil War era because American potteries, “backed by big capitalists,” had grown strong over the previous ten years and did not need protection.[47] He asserted in a letter to the U.S. Tariff Commission that the American glassware industry then supplied eighty percent of the country’s glassware and exported a considerable amount in addition. The letter accompanied a petition signed by 250 individuals representing importers and dealers in twenty states.[48]

His lobbying efforts against high tariffs continued during the 1890s. In 1890, he was one of a committee of fifty businessmen who went to Washington to appear before the Congressional Committee on Finance in opposition to the passage of the McKinley tariff bill which had just been enacted by Republicans.[49] During further congressional debate on tariffs in 1893, Isidor, then president of the Pottery and Glassware Board of Trade in New York City, was frequently consulted as an authority on the impact of the tariffs upon business. As privileged “swallowtail Democrats,” a term applied to wealthy, tuxedo-wearing members of the party, he and Nathan were members of a party faction that favored good government, free trade, currency reform, and more stable and predictable business conditions. Isidor spent evenings studying in his home library, which contained works on economics, and was therefore well suited to become a spokesman for these interests. It came as little surprise when, during the second presidency of Grover Cleveland, for whose reelection he had campaigned, he was nominated to fill a vacancy in the House of Representatives caused by the resignation of Ashbel P. Fitch—in anticipation of a vote on a bill proposed by William L. Wilson that would reduce tariffs. With little opposition and the backing of powerful New York City German-Americans such as Oswald Ottendorfer, editor of the New Yorker Staats-Zeitung, he was sent to Congress to finish out Fitch’s term in 1894, but did not seek re-election.[50]

There was a general understanding that Isidor’s nomination had been engineered by Cleveland with the reluctant acquiescence of Tammany Hall. He was clearly not the people’s candidate. According to the New York Tribune, there were “Tammany men who do not hesitate to declare their disgust with the nomination of this opulent merchant, which they say was forced upon Mr. Croker by Mr. Cleveland.”[51] He might have occupied other high positions, as did, for example, Philadelphia retailer John Wanamaker. In 1893, as Cleveland formed his Cabinet, Isidor’s name had come up for the position of Postmaster-General, Wanamaker’s old office under Republican Benjamin Harrison. However, despite Isidor’s prominence in business circles and his clear leadership capability, he did not regard himself as a public figure and preferred to stick closely to his private business interests.

Nathan Straus, on the other hand, enjoyed the public spotlight. He was appointed New York City’s Park Commissioner by Mayor Hugh J. Grant in 1891 and later served briefly as New York Health Commissioner. During the depression of the 1890s, he set up stations where poor New Yorkers could obtain necessities such as cheap coal and inexpensive, but pure, pasteurized milk. He became a candidate for mayor in 1894, but many saw his Tammany-Hall backing as a sign he was being used to win the Jewish vote and he withdrew his candidacy. He was not without critics, however. Some accused him of being more interested in winning public adulation for his charitable activities than in bettering the living conditions of the underprivileged. The low pay of Macy’s female clerks, which ranked at the lower end of average pay for department store employees at the time, was cited as an instance of his lack of real concern for improving the economic status of the poor.[52]

Isidor, too, had critics, particularly among supporters of protective tariffs. There is no indication that he was bothered by those who saw him as a powerful elitist unconcerned about the fate of the American worker. Although Macy’s advertising always took a populist tone, insisting that the store sided completely with its thrift-minded customers, Isidor was perceived by some as a self-interested political insider, a member of Cleveland’s “kitchen cabinet,” and likened to sugar-magnate and third-generation, German-American entrepreneur Henry O. Havemeyer despite their stands on opposite sides of the tariff question.[53] During his election campaign in January 1894 the American Economist, published by the Protective Tariff Association, ran verses which read:

Vote for Straus
He is interested in Foreign Factories,
Where he pays Low Wages,
Therefore he Wants Free-Trade,
So that he can Import his Cheap Foreign Made Goods.
And Sell them at his Store—Macy’s.
He has no Use for American Goods.
A Vote for Straus Means to Help Close American Factories.

As the verse made clear, protectionists argued that importing cheap goods made by European china and glass workers, who earned wages two-thirds lower than those of American workers in the same industries, would ultimately drag down the wages of American workers and potentially bankrupt domestic factories.[54]

Unlike Henry O. Havemeyer and other business tycoons of the Gilded Age, Isidor Straus maintained a pristine personal reputation. Self-interest can be discerned in all his activities, yet he was never associated with scandal. He was a model citizen and an exemplar of wealth, avoiding extravagance and donating time and money to worthy causes. He sat on numerous boards that sought to improve the condition of newly arrived Eastern-European Jews. Typically these organizations encouraged newcomers to adopt American customs as quickly as possible and assimilate into American society so that anti-Semitic prejudice against them would not spread to the earlier German-American Jewish population that had worked so hard to win success and acceptance. In the eyes of patrons such as Isidor Straus, the Lower East Side Jewish ghetto did not promote civic involvement, patriotism, or adaptation to American life. In 1889, with Jacob Schiff, Isaac Seligman, and other German Jews, Straus co-founded the Hebrew Educational Alliance, later called simply the Educational Alliance, which at first steered new Jewish immigrants away from their traditional cultural behaviors, such as speaking Yiddish, and their adherence to what Jewish elites regarded as superstitious religious beliefs. He also served as vice president of the Manhattan Hospital and the J. Hood Wright Memorial Hospital and a director of the Montefiore Home for invalids.[55]

The attention Isidor and all the Strauses paid to maintaining good professional reputations benefited them enormously in business. A story is often told about how after the Civil War Lazarus paid a long overdue debt to New York City merchant George Bliss for goods he had purchased before the war’s outbreak.[56] According to the story his act of extraordinary honesty repaid him many times over by establishing him as a good credit risk, a rare status for Jews to achieve because of prejudicial beliefs that they were secretive about their businesses, moved frequently, and did not feel bound to deal honestly with Gentiles. Whether it was Lazarus’s deed, or subsequent honest dealings on the part of the Strauses, they were astonishingly successful in getting credit from Gentiles on highly-favorable terms. In acquiring a share in the Wechsler & Abraham department store, the brothers asked for a $500,000 (approximately $12.5 million in 2010$) loan from the United States Trust Company where, it happened, George Bliss was a director. When Bliss learned the loan was for the Straus family, he allegedly said, referring to Lazarus, “Well, if the old man is still with the firm, he is good for anything to which he will put his name.”[57] The Herald Square store furnishes another example of the Strauses’ acceptance by the elite New York City business community. Its cost, including ground leases, construction, and fixtures exceeded five million dollars (approximately $134 million in 2010$). Financing, in the name of L. Straus & Sons as lessor to R. H. Macy & Co., required loans from three banks for a total of $4.2 million dollars (approximately $113 million in 2010$). The funds, repaid by 1906, were advanced at five-percent interest without collateral by the banks.[58]

In tributes to Isidor following his and Ida’s tragic deaths at sea, he was hailed as “a representative of humanity in its best form” who “lived a saint and died a hero.”[59] Memorial services at Carnegie Hall and at synagogues in Manhattan and Brooklyn were thronged with thousands of mourners, many of whom had to be turned away. When an estimated 25,000 residents of the East Side showed up at the Educational Alliance the service had to be postponed until a much larger venue could be found.[60] However there is some evidence that Isidor appeared aloof, even haughty, to those who were not close to him. A distant relative from Germany who sought work at Macy’s in 1897 found him unapproachable and referred to him in letters to home as “Sir Isidor.”[61] He could also become a fierce enemy to anyone who crossed him, such as department store rival Henry Siegel who, according to a suit for damages by L. Straus & Sons in 1895, reneged on a contract. Siegel brought a countersuit. The next year when Siegel was nominated for membership in the Uptown Club, to which Isidor belonged, Isidor had him blackballed along with the two members who nominated him. The feud continued for several years, with the Strauses trying to block Siegel’s plans for a store at Macy’s old Fourteenth Street site and Siegel in turn buying the small 34th and Broadway corner lot on which the new Macy’s was to be built, a piece of land which has still not been incorporated into the modern store.[62]

Isidor was a dedicated family man, devoted to his children and his wife Ida, who in the end would not forsake him at the point of death. He was hailed for his chivalry in the Titanic disaster, for refusing to get into a lifeboat while women waited, insisting that Ida save herself while he remained behind. They died together after she declared she would not go without him. The story of their devotion galvanized a rush of public sentiment toward both Isidor and Ida.[63] A park dedicated to their memory was created on the Upper West Side in Manhattan.

Although Isidor and Nathan were very close, conflict over whether Isidor’s or Nathan’s sons would take over the management of Macy’s following Isidor’s death caused a rift between Nathan and his nephews, Jesse, Percy, and Herbert, who had inherited their father’s half-share of the business. Nathan’s sons were younger and less experienced in business than Isidor’s sons, the latter having been involved with the store for some years by the time of Isidor’s death. Nathan accepted an offer from Isidor’s sons to buy his share of Macy’s for a handsome sum, as well as his shares in Abraham & Straus and L. Straus & Sons. The settlement and the conflict which preceded it evidently left a legacy of ill will on the part of Nathan. In a 1924 letter to the chancellor of New York University, Nathan wrote bitterly of Percy, “Since his father’s death… I have not been in the firm of R.H. Macy and Co., as this man, together with his older brother [Jesse], made it impossible for me or my sons to remain, and I would not care to meet him.”[64]

Immigrant Entrepreneurship

Isidor Straus was a highly-assimilated, German-Jewish American who made use of social networks and business connections in both Jewish and Gentile worlds. Although not exempt from the social ostracism that Jews experienced in late-nineteenth-century America, in many ways he was the “exceptional” Jew who moved easily in Gentile circles and, by his extraordinary rectitude, overcame their distrust. His, and Nathan’s, close ties with German Jews and their acceptance in the Gentile world clearly benefitted the Straus family’s business dealings. The brothers, however, seemed to have no special association with non-Jewish German immigrants, perhaps even less so than with American-born Gentiles.

The Strauses showed a high degree of adaptability to the differing conditions and customs of both of their dwelling places in their adopted land, the South and the North. When the family lived in Talbotton, there was no Jewish community so the children attended local schools and Lazarus discussed religious issues with the town’s Protestant ministers. Lazarus did not support slavery philosophically, nor was he in favor of Southern secession, yet he was not reviled by native-born southerners for his positions. Despite his opinions, he adapted to local conditions by conducting business with slave-owners and owning slaves himself. Isidor’s mother Sara needed help with housekeeping since she had the use of only one arm following a stroke. To assist her, the family hired slaves belonging to others and, according to Oscar Straus, some of them asked the Strauses to buy them because they preferred the Strauses as their owners. Lazarus Straus saw to it that at least two adult male slaves received training in a trade and, when the family went North after the Civil War, they took a couple of young former slaves with them because they had no other family.[65]

As a young man Isidor was an enthusiastic supporter of the Southern cause who was eager to join the Confederate Army. While traveling to Liverpool by ship in 1863, he and a companion heard an erroneous report of a Confederate victory at Gettysburg and, Isidor later wrote, felt “such elation…that we had great difficulty in restraining ourselves from jubilation.”[66] Throughout his life Isidor cultivated economic and social relationships in the South, investing in postwar rebuilding projects, doing business with Southerners as a partner in L. Straus & Sons, and visiting there. Georgians, and residents of Talbotton and Columbus in particular, claimed him and his brothers as native sons of renown.[67]

The Strauses’ ties with German Jews were very significant for their business activities. When the family moved to Columbus, Georgia in 1861, they joined a small but established Jewish community. The city was mobilized for war production and two Jewish-German families who were friends of the Strauses, the Haimans from Prussia and the Rothschilds, supplied swords and uniforms, respectively, to the Confederates. Elias Haiman was on the ship with Isidor that ran the Union blockade in 1863. Later, when Isidor met Elias in Liverpool, the two became roommates. In 1893, Nathan and Isidor joined with Columbus neighbor Simon F. Rothschild to buy a half interest in Wechsler & Abraham. Simon, who was about 16 years younger than Isidor, was the son of Amanda Blun Rothschild, older sister of Ida Blun who became Isidor’s wife in 1871. The Bluns, who had settled in New York City, were also German Jews.[68]

Although Isidor was not a practicing Jew, and did not bring up his children as religious Jews, he was an active benefactor in the Jewish community. He belonged to the elite Harmonie Club and retained ties to Jewish family friends.[69] He, Nathan, and Oscar, took public stands against anti-Semitism.[70] On the other hand, Isidor was equally at home among Gentiles, as were his brothers. Isidor and Nathan belonged to the Manhattan Club, which had a Gentile, “swallowtail Democrat” membership that included Grover Cleveland, William K. Vanderbilt, and Secretary of War Daniel Lamont, as well as other powerful men. Isidor also belonged to the Free Trade Club, the Reform Club, and the Uptown Club on Fifth Avenue, all with majority Gentile membership.[71] The Straus family was closely affiliated professionally, politically, and socially with Macy’s partner Charles Webster, New York City Mayor Hugh J. Grant, President Grover Cleveland, and many other non-Jews. They spent summers in the same resorts as the Clevelands, and Nathan’s horses shared a stable with Grant’s. The Strauses’ closeness to native-born Americans, as well as their respect for several celebrated Americans and their dedication to weaving their Jewishness with their American identify, is reflected in family names.[72] Nathan named one of his sons Charles Webster Straus and another Hugh Grant Straus. Oscar, who published a book on religious freedom proponent Roger Williams, named his only son after him. Lee Kohns, son of Hermine Straus Kohns and Lazarus Kohns and partner in L. Straus & Sons after the retirement of his father, was named after Robert E. Lee. The family’s social integration and stature is also reflected in the admittance of all three of Isidor’s sons to Harvard in an era when colleges applied strict enrollment quotas to Jewish applicants.[73]

The Strauses spoke English at home and seemingly, based on their wish to be full-fledged Americans, retained no customs related to their origins in Germany.[74] Their hiring practices at Macy’s showed a willingness to choose employees from a wide variety of mostly immigrant backgrounds. They did evidence a preference for hiring German domestic servants, though whether this was a deliberate choice is unknown. They made frequent trips to Germany, both to visit remaining family members in the dwindling Jewish community of Otterberg and to conduct business.[75] They hired German relatives to manage and work in their china and glass factories. Oscar and Edgar Gutherz, brothers of Nathan’s wife Caroline (“Lina”), ran the china and porcelain factories in Carlsbad, while Julius Straus, a second cousin, ran the Rudolstadt works.

Conclusion

Isidor Straus and his brother Nathan were prominent New York City retailers of the late-nineteenth and early-twentieth centuries known best for running the R.H. Macy department store. The Strauses’ ownership of Macy’s, consummated in 1896, offered a way to integrate vertically their china and glassware importing company, L. Straus & Sons, at a time when other large-scale retailers were cutting out middlemen and American products were displacing imported goods on store shelves. Isidor and Nathan—and their younger brother Oscar—distinguished themselves in other fields as well, and their reputations have lived on far beyond their lifetimes. Nevertheless, as great as their retailing achievements were in expanding Macy’s, keeping it on a profitable course through the depression of the 1890s, and authorizing its move to Herald Square, the store’s greatest growth and glory occurred after the First World War when neither of them were in command. Isidor’s three sons, who took over full management in 1914, were eager to modernize the store’s organization and operation, particularly by creating a hierarchical management structure and a training program for employees. They also wished to upgrade it from a bargain store, whose main attraction was low prices, to one with a reputation for style. Although Macy’s became more stylish in the 1920s, the ensuing Great Depression and wartime retailing restrictions during World War Two trimmed those ambitions considerably.[76]

In terms of sheer growth, both physical and in sales volume, Macy’s enjoyed great prosperity. The physical size of the store doubled in the 1920s. By 1928 the staff had grown to 12,500 employees. A few years later the Strauses obtained the entire block, from Thirty-Fourth to Thirty-Fifth Street, and from Broadway to Seventh Avenue minus one small corner. Additions expanding the store to the full block took place in 1931 resulting in the store of the present day, whose slogan remains “the world’s largest store.”[77]

Straus family ownership and control of the business diminished through the years to the point that historian Ralph Hower could write in his 1943 book on Macy’s that the business was no longer a family business but a public corporation.[78] Jesse and Herbert Straus died in the 1930s, while Percy remained as president until 1939 when illness forced him to resign, instead becoming chairman of the board. He was succeeded as chief executive officer by Jesse’s son, Jack I. Straus, who retired in 1968. The last Straus to occupy a top executive position was Jack’s son Kenneth, who retired as a senior vice president in 1986, bringing to an end the Straus family tradition of “merchant princes” established by Isidor.[79]

Notes