Business: Chains Unchained?

In Utah on Election Day the U.S. will learn whether one of the tides which reached flood stage in the depression of the ’30s has finally begun to ebb. The big issue in Utah’s election is Proposition No. 2, a referendum on post-depression’s outstanding example of Stone Age economics: the most vindictive chain-store tax ever proposed. Not content with imposing a tax of $50 to $500 per store (on a graduated scale geared to the total number of stores owned by a chain all over the U.S.), the Utah bill also aims to embalm existing chains by putting additional taxes up to $5,000 on every new unit and on any old store expanded or relocated.

The chains, having stalled off the tax 18 months ago (TIME, May 19, 1941), have been busy fighting it ever since. The argument that went best with the public was that the chains spend $27,000,000 annually in the State (for farm produce, manufactured goods, wages, etc.*), $4,000,000 more than the total sales of their 123 Utah stores.

Even with other good arguments on their side, the chains were badly scared, feared that only a miracle could save them. One miracle came in mid-August when hundreds of small storekeepers powwowed in Salt Lake City to hear anti-chain speeches. But they got a surprise when hard-hitting Joseph Frank Grimes, founder-president of the powerful Independent Grocers’ Alliance (5-10,000 stores), told them: “You are not the victims of the chain stores and the supermarkets. You are the victims of your own fears.”

Four weeks ago progressive, wavy-haired Lewis C. Shave, who heads thousands of independent grocers federated in his Nation-Wide Stores Co., told Utah grocers that Georgia courts had quickly applied that State’s chain-store tax to his federation, put it out of business in the area. Said he: “These laws are not in the best interest of the independent grocer.”

In Utah this week political dopesters figured the chains had a better than even chance to win. For one thing the all-powerful Mormon Church has been pleasantly silent during the whole hubbub (perhaps because it controls a wholesale house which sells to chain stores). If the chains win, it will be their biggest victory since California voters tossed out chain-store taxes in 1936, will probably mean an all-out drive against the chain-store tax laws of 19 other States.

*Chiefly because of their large purchases of Utah beet sugar, flour, meats, etc., to be sold in other parts of the country.