Broken Links

"The Year 1929 Will Go Down In The Annals Of Your Company As One Of The Most Extraordinary And Unusual In Its History." Last week stockholders of Kroger Grocery & Baking Co. recalled these words in the annual message, a year ago, from William Henry Albers, then president of the company. During the past fortnight events have transpired in such a way as to confirm Mr. Albers' statement beyond any stockholder's expectations.

Although the Kroger chain now has 5,600 stores and 23,000 employes, is supposedly negotiating for more, all has not been going well. The 1929 operating margin was slimmer. Change from a centralized into a nine-branch decentralized system was expensive, large inventory losses have been suffered. But the real seriousness of the Kroger difficulties was not fully apparent until last week.

The first snapping of Kroger links occurred in March when Founder-Chairman Bernard Henry Kroger resigned, accompanied by other officers near and dear to him. If Mr. Kroger Senior had been the only resignee, Cincinnatians, fond of their nation-spanning company, would have excused it on account of his 70 years and the need of aquiring a new wife, 36. But such a wholesale exodus demanded an explanation. Officially it was given as: "A friendly disagreement on business policy"--which, like many business announcements, was only partially true.

The second snapping took place last week. One day it was announced that able, popular Col. C. O. Sherrill, Cincinnati city manager with a national reputation, had become a Kroger vice president. Next day it was disclosed that an error in bookkeeping had been found, that profits for 1929 were nearly $500,000 less than originally reported, that a reserve of $500,000 had been set up against further errors still lurking in the books. At this moment youngish William Henry Albers who had succeeded Mr. Kroger as chief executive, resigned, both from Kroger and Commercial National Bank and Trust Co. of New York.

Startled Cincinnatians recalled the company's history. Mr. Kroger Senior, after working in several grocery chains, called himself The Great Western Tea Co.* and started door-to-door selling. Chief of his abilities was not selling, but buying. He soon opened stores in the centre of town, where his values could not escape notice. He acquired ten stores in as many years. Late in 1927 Mr. Kroger is supposed to have sold his holdings to Lehman Bros, for $40,000,000, and a short time later Mr. Albers became president. The following year was a big one for Mr. Kroger. In March he gave each of his six children $1,000,000, then married again. In July he was made an honorary lifetime member not only of the Cincinnati Rotary but also of the Kiwanis. He now resides in Slant-acres, a mighty mansion.

During recent times, the Kroger policy has been directed by Mr. Albers rather than Patriarch Kroger. Mr. Albers also lives in a huge house, dignified by a title, Alberly Mansion, and for him, too, the road to a mansion was long. At 21 he was hired by Schneider Bros., grocers, and a year later was made secretary. When Kroger acquired Schneider in 1908, Mr. Albers was included with other assets. Until recently he has divided his time between acquiring new stores for the chain and such homely diversions as riding, golfing (on his own links), tennis (on his own courts), gardening (in his sunken garden).

When Mr. Albers was moved into Chairmanship it was believed that Lehman Bros., bankers for the firm, wished to retain him as a capable adviser, but to block his acquisitive instincts. Just what his connection with last week's trouble was seems vague. Some Cincinnatians say it was a demonstration of loyalty to the Krogers, embarrassed by the discovery of errors in the books. Others mention that the faulty audit had been done by R. J. Beaman Co., which recently failed with liabilities of $500,000, and with whose head Mr. Albers is supposedly friendly.

With Mr. Albers gone, the Kroger re-organization seems well under way. In as president is Albert H. Morrill, longtime counsel for the company. The connecting link between Lehman Bros. and the directorate is John B. Bonham, general manager of the company, onetime street car man who rides serenely through all the mischief.

* Not to be confused with the Great Atlantic & Pacific Tea Co. of America which is by far the biggest chain and is largely owned by the little known Hartford family. During the '90s, the Great Atlantic & Pacific Tea Co. of America, in Cincinnati since 1857, withdrew from competition with Kroger but came back to town a few years ago.

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