I received an interesting email from one of our readers and assume it was correct although I always thought that Julius Rosenwald was the founder. So I went to the internet and found the following historical entry:
Richard Warren Sears was a railroad station agent in North Redwood, Minnesota, when he received an impressive shipment of watches from a Chicago jeweler which were unwanted by a local jeweler. Sears purchased them, then sold the watches for a considerable profit to other station agents, then ordered more for resale. Soon he started a business selling watches through mail order catalogs. The next year, he moved to Chicago, Illinois where he met Alvah C. Roebuck, who joined him in the business. In 1893, the corporate name became Sears, Roebuck & Co. The company was founded by Richard Warren Sears and Alvah Curtis Roebuck in 1893 as a mail order catalog. Julius Rosenwald took control in 1895 and expanded its sales and profits greatly. In 1925 it began opening local department stores. The business peaked in the 1950s and 1960s, then began a long, slow contraction.
In 1893, Richard Sears and Alvah Roebuck renamed their watch company Sears, Roebuck & Company and began to diversify. The company had sales of $800,000 in 1895, but the national Panic of 1893–a full scale depression–caused a cash squeeze and large quantities of unsold merchandise. Roebuck decided to quit (though he later returned in a publicity role). Sears offered Roebuck’s half of the company to Chicago businessman Aaron Nusbaum, who in turn brought in his brother-in-law Julius Rosenwald, to whom Sears owed money. In August 1895, they bought Roebuck’s half of the company for $75,000. The new Sears, Roebuck and Company was re-incorporated in Illinois with a capital stock of $150,000 in August 1895. Sears and Rosenwald got along well, but Nusbaum was a problem. Sears and Rosenwald bought him out for $1.3 million in 1903.
Rosenwald brought to the mail order firm a rational management philosophy and diversified product lines: dry goods, consumer durables, drugs, hardware, furniture, and nearly anything else a farm household could desire. From 1895 to 1907, under Rosenwald’s leadership as Vice President and Treasurer, annual sales of the company climbed from $750,000 to upwards of $50 million. The prosperity of the company and their vision for greater expansion led Sears and Rosenwald to take the company public in 1906, with $40 million in stock. After Sears resigned the presidency in 1908 due to declining health, Rosenwald was named president and chairman of the board and had full control. Sears’s successful 1906 initial public offering (IPO) marks the first major retail IPO in American financial history and represented a coming of age, financially, of the consumer sector.
The company was badly hurt during 1919-21 as a severe depression hit the nation’s farms after farmers had overexpanded their holdings. To bail out the company, Rosenwald pledged $21 million of his personal wealth. By 1922, Sears had regained financial stability. First he oversaw the design and construction of the company’s first department store within Sears, Roebuck’s massive 16-hectare (40-acre) headquarters complex of offices, laboratories and mail-order operations at Homan Ave. and Arthington St. on Chicago’s West Side. The store opened in 1925. In 1924, Rosenwald resigned the presidency, but remained as chairman until his death in 1932; his goal was to devote more time to philanthropy.
Farmers did business in small rural towns. Before the Sears catalog, farmers typically bought supplies (often at high prices and on credit) from local general stores that had a narrow selection. Prices were negotiated (by the man of the family), and depended on the storekeeper’s estimate of a man’s credit worthiness. Sears took advantage of this by publishing his catalog with clearly stated prices, so that consumers could know what he was selling and at what price, and order and obtain them conveniently. The catalog business grew quickly.
The first Sears catalog was published in 1888. By 1894, the Sears catalog had grown to 322 pages, featuring sewing machines, bicycles, sporting goods, automobiles (produced from 1905–1915 by Lincoln Motor Car Works of Chicago, not related to the current Ford Motor Company brand of the same name) and a host of other new items.
Sears is now owned by a private equity firm in Greenwich Connecticut and appears to be heading into the sewer, a sad ending to a great American company.