Executives: The Pinch-Penny Philanthropist

His grandmother lived 101 years and his mother reached 103. Sebastian Spering Kresge, grounding his hope on heredity and a lifelong abstinence from whisky and tobacco, confidently expected to equal them, and he nearly did. But last week, nine months short of his hundredth birthday, Kresge died of pneumonia and complications that doctors gently described as “old age.” For the founder of the S.S. Kresge Co.’s far-reaching chain of variety stores, not attaining the century mark was one of the few failures in a long and productive life.

About to turn 99 this summer and aware that he was failing, Kresge, with “great regret,” submitted his resignation as board chairman to Kresge’s Detroit headquarters. Son Stanley, 66, succeeded his father as chairman of a company that is now second in its field only to F.W. Woolworth & Co., has 930 variety or discount stores (against Woolworth’s 3,266). This year Kresge expects to surpass $1 billion in sales for the first time, and its annual sales growth rate of 12.5% is matched among retail chains only by Sears, Roebuck.

Traveling Salesman. “S.S.,” as Kresge was called by subordinates, was famed for his penury, which he acquired in the eastern Pennsylvania farming country where his Swiss ancestors had established the small (pop. 500) town of Kresgeville 120 years before his birth. Sebastian’s father was a hard-pressed farmer who had one farm seized by a sheriff for mortgage nonpayment; young S.S. helped support a later, smaller farm out of his $22-a-month salary as a schoolteacher.

After he turned 21, Kresge gave up teaching for selling. As a traveling drummer in tinware, he saved $8,000 in commissions by the time he reached 30. One of his customers was Dimestore Pioneer Frank W. Woolworth, to whom Kresge sold a sizable order of tinware. When Kresge noticed that Woolworth’s 19 stores were profitably run on a cash-only basis, the traveling salesman thought he saw his future. In 1897, despite a financial panic, he used his savings for a half interest in stores in Memphis and Detroit run by another five-and-dime pioneer, John G. McCrory. Two years later, Kresge bought out the Detroit store and began his own business. It was an instant success, partly because Kresge was willing to work 20-hour days and put all his money back into the enterprise, partly because he was a whiz at spotting “100% locations” where all a town’s shoppers passed by. By the time Kresge incorporated the firm in 1912, he had 85 stores. In 1925, with 306 stores in operation and a fortune of $200 million already piled up, Kresge moved out of day-to-day management.

Kresge knew well how to pinch pennies—or at least nickels and dimes. He bought his clothes off the ready-to-wear racks, traveled in a Pullman upper berth because the fare was lower than for the lower. He allowed himself the luxury of a 10¢ shoeshine, but stopped after his shoeshine boy raised the price to 15¢. Colleagues once persuaded him to take up golf as a hobby, along with beekeeping he had enjoyed since boyhood, but he soon gave up the game because he lost too many golf balls. Invited to speak at the 1953 dedication of Harvard’s Kresge Hall, which he had endowed, he stood up and said, “I never made a dime talking,” and sat down. He impressed his frugality on employees. Today, Kresge workers routinely turn out lights whenever they leave company rest rooms. Under the glass tops of executive desks is a written remedy against telephonitis: “Is this call necessary?”

Generous Giver. Yet those same employees were beneficiaries of one of the U.S.’s first plans for paid vacation and sick leave. Kresge’s Methodist upbringing had taught him to be charitable as well as chary. He became a far-ranging philanthropist. In 1924, before foundations had become popular as tax-relief devices, he established the Kresge Foundation, gave $1.6 million in Kresge stock to get it started.

Kresge could also be generous at home. He had two unsuccessful marriages before wedding Clara Zitz Kresge in 1928, made a handsome settlement in each case. Some donations were based on his personal code. “If there were any sound arguments to be advanced on behalf of the use of alcoholic beverages,” Kresge once said, “I wonder if I might not have discovered them in all these years.” On those grounds, when Prohibition arrived he gave $500,000 to the Anti-Saloon League, and personally organized a National Vigilance Committee to help enforce the 18th Amendment.

At his direction, the foundation also spread its money on wider projects, ranging from a University of Michigan medical-research center and a building at M.I.T. to the little General Hospital in Monroe County, Pa., where Kresge died last week.

By the time of his death, the man who had acquired a reputation as a cheapskate had given away most of his wealth, including 2,500,000 shares of Kresge stock, now worth $100 million, to his foundation. He had often said, in stating his lifelong ambition: “I really want to leave the world better than I found it.”