Sewell Avery

Sewell Lee Avery (November 4, 1874 – October 31, 1960) [1] was an American businessman who achieved early prominence in gypsum mining and became president of the United States Gypsum Company (1905-1936).

At the beginning of the Depression, he was asked by J.P. Morgan & Co. to turn around the failing Montgomery Ward and succeeded in restoring its profitability by making huge changes. In 1936, Fortune magazine said that Avery was "generally held to be the No. 1 Chicago businessman."[2] In the postwar years, however, he failed to take advantage of the demand for durable goods and did not expand Montgomery Ward, costing it prominence in the retail field.

Avery was active in Chicago civil activities, for instance, supporting the Commercial Club's plan for a Museum of Science and Industry and serving as its first president. He was also prominent in social circles, and in 1912 founded the private Lincoln Park Gun Club with Oscar F. Mayer, Philip K. Wrigley, and other prominent Chicagoans.

Early life and education

Sewell Lee Avery was born in Saginaw, Michigan as the son of Ellen Lee and Waldo A. Avery, who were a leading business family of the region, with interests in lumber, banking and mining.[3] His father's family were considered lumber barons. Avery attended public schools in Saginaw and Detroit, and the Michigan Military Academy.[4] He earned a bachelor of laws degree in 1894 from the University of Michigan.

Marriage and family

Avery married Hortense Lenore Wisner soon after graduation. They started out in a small flat by the lake when he was taken on at a gypsum plant in Alabaster, Michigan. (His father was an investor in it and helped him get a start.) They had the first bathtub in town.[4]

Career

In 1894, his father gave him a role in managing a gypsum plant in a small town in Michigan. Avery changed the name to Alabaster Company, after the town, because he liked the sound of it. This was one of several companies that in 1901 became part of the consolidated gypsum concern United States Gypsum Company. Then working as a sales manager in Buffalo, Avery became president in 1905. He kept that position until 1936, managing the company through extended growth. After that, he served as chairman of the company until 1951. With his brother Waldo Avery, he was a 3.6% stakeholder in USG.[5]

Noticing his success, J.P. Morgan & Co. invited him on to the board of US Steel in 1931. That same year, at the beginning of the Depression, Morgan & Co. invited Avery to take on the challenge of re-establishing the profitability of Montgomery Ward, of which it owned a majority, offering Avery a generous salary and stock options.[6] After rapid expansion of retail outlets through the 1920s, from 10 stores in 1926 to 554 in 1930, it was rapidly losing money.[7] Avery began as chairman by cost cutting and closing stores, replacing catalog managers with experienced chain-store managers, and reducing lines that were losing money.[6]

He was admired; an employee later said of this time:

"I never saw such a mass movement forward in a business. Avery turned the place inside out, even to the fixtures and decorations. All the fellows were hustling and bustling to make the grade in a big way. Everyone wanted to get in there and pitch for the old man."[8]

By making the company become profitable, Avery earned great wealth in the process through significant stock options.[9] His strong control and caution worked against him as the company began to recover in the mid-1930s, when he might have allowed some expansion, but he believed the economy too fragile.[9]

As president of the Commercial Club of Chicago, Avery supported Julius Rosenwald's idea for an industrial museum as early as 1925. Rosenwald had built up Sears, Roebuck as a strong competitor to Montgomery Ward.[10] Avery followed up on his early support and served as the first president of the Museum of Science and Industry in Chicago.

He supported politically conservative causes. He was a financier of the American Liberty League and a national adviser for one of its front organizations, the Crusaders. Avery gave generously to the Church League of America (CLA). He was one of many successful businessmen who did not favor the New Deal of President Franklin D. Roosevelt.[11]

During World War II, Avery repeatedly opposed actions of Roosevelt's National War Labor Board and opposed labor unions.[12] He resisted signing a contract after a union had won representation for 7,000 of Montgomery Ward's employees until twice ordered by Roosevelt. When Avery refused to settle a strike in 1944, endangering the delivery of essential goods, Roosevelt's administration used emergency measures to remove him from office and temporarily seize the company; in April 1944 two National Guard men had to pick him up by an arm each and carry him out of his office.[13][14][15] Avery yelled at the Attorney General, who had flown to meet with him and try to avert a showdown, “To hell with the government, you... New Dealer!”[9]

Following the government's seizure of Montgomery Ward, Avery was asked his plans. He said:

"... the government has been coercing both employers and employees to accept a brand of unionism which in all too many cases is engineered by people who are not employees of the plant...these devices...only appear to make workers free to choose,... are a disguise for leading the nation into a government of dictators."[16]

Soon back in charge of the retail company, Avery read widely on business. Fearing more depression after World War II, which had usually followed wars, he misread the postwar economy. Demand and available private money fed a rise in the retail business for durable goods. He continued his bearish position under the Harry S. Truman and Dwight D. Eisenhower administrations. Unlike Sears, Avery resisted pension plans, insurance and profit sharing with employees; he refused to spend money on company expansion.[17] Soon Sears far outperformed Montgomery Ward; by 1951 it had more than double the business volume and had surpassed Montgomery Ward in retail stores, while Avery was prepared to weather a depression.[18] Even after Avery resigned in 1954 as president, MW never regained its former position.[9]

Avery was president of U.S. Gypsum and later of Montgomery Ward (1930-1954), as well as a director of J.P. Morgan’s U.S. Steel.[9] In 1955, Sewell retired with a fortune estimated at $327 million.[11] He died in 1960, leaving an estate of $20 million (before taxes) to two daughters and seven grandchildren, according to filed inheritance tax returns.[19]

References

  1. ↑ Obituary: "Sewell Avery", Saginaw News, 1 November 1960, pp. 1 and 5
  2. ↑ Grant (1994), Money of the Mind, p. 22
  3. ↑ The Book of Detroiters.
  4. 1 2 James Grant, Money of The Mind: Borrowing and Lending in America from the Civil War to Michael Milken, New York: Macmillan, 1994, p. 19
  5. ↑ International Directory of Company Histories, v.26. St. James Press. 1999.
  6. 1 2 Grant (1994), Money of the Mind, p. 21
  7. ↑ Shearer, Benjamin (2007). Home Front Heroes: A Biographical Dictionary of Americans during Wartime v.1. Westport, Ct: Greenwood Press. ISBN 0313334218.
  8. ↑ Grant (1994), Money of the Mind, p. 22. Note: Avery was 58 when he became chairman of Montgomery Ward.
  9. 1 2 3 4 5 Gordon, John Steele (1994). "The Perils of Success". American Heritage Magazine. v.45, issue 3: American Heritage Publishing Company. Retrieved April 2, 2012.
  10. ↑ Ascoli, Peter M. (2006). Julius Rosenwald: The Man Who Built Sears, Roebuck and Advanced the Cause of Black Education in the American South. Bloomington, IN: Indiana University Press. ISBN 0253347416.
  11. 1 2 Richard Sanders (March 2004). "Facing the Corporate Roots of American Fascism: Sewell Avery (1874-1955)". Press for Conversion! (53).
  12. ↑ "The Avery Problem". Time Magazine. June 19, 1944.
  13. ↑ http://www.history.com/this-day-in-history/fdr-seizes-control-of-montgomery-ward
  14. ↑ http://www.presidency.ucsb.edu/ws/index.php?pid=16487
  15. ↑ http://www.politico.com/news/stories/1207/7557.html
  16. ↑ James Grant, Money of The Mind, p. 26
  17. ↑ Grant (1994), Money of the Mind, p. 28
  18. ↑ Grant (1994), Money of the Mind, p. 30
  19. ↑ "Sewell Avery Estate", New York Times, 1 March 1962, p. L 29
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