one-third interest in the company to Sears for $25,000 (about $690,000 in today’s dollars).
With no one to rein in Richard Sears’ almost exclusive dedication to increasing sales at
the expense of sound business practices,
Sears, Roebuck and Co. was soon facing financial collapse. In fact, before 1895 was out, Sears was forced to look for new investors, and he soon found one in a thirty-three-year-old manufacturer of men’s clothing named Julius Rosenwald.
The Savior
Julius Rosenwald was born in Springfield, Illinois, on August 12, 1862, to a successful clothier and his wife, both of whom had immi- grated to the United States from Germany. When he was ap- proached
about investing in
Sears, Roebuck and Co. in 1895, he was already well aware of Ri- chard Sears’ financial problems because Sears’ company owed his clothing firm a considerable sum of money for a number of men’s suits it had purchased but never paid for.
On August 13, 1895, Rosen- wald agreed to cancel Sears’ debt with his clothing company in ex- change for a share in Sears, Roe-
Julius Rosenwald, pictured here during the 1920s, saved Sears, Roebuck and Co. from complete financial ruin on no less than two separate occasions.
buck and Co. Rosenwald’s brother-in-law, Aaron Nusbaum, who had brought Sears and Rosenwald together, also invested with Sears, an arrangement that Sears readily agreed to because of his desperate need of Rosenwald’s and Nusbaum’s business expertise. Rosenwald didn’t immediately take an active role in the running of Sears, Roebuck and Co., but Nusbaum, who turned out to be a good business manager, did. Gradually, he managed to restore financial order to the company, but still there was an underlying and very serious problem: Nusbaum and Sears didn’t get along. The clash between the two men eventually became intolerable, and when Rosenwald began actively working for the company in 1896, he and Nusbaum also clashed. Eventually, Sears and Rosenwald agreed: Nusbaum had to go. Consequently, around 1899, Sears and Rosenwald bought Nusbaum’s interest in the company for the stag- gering sum of $1.25 million (about $34.5 million in today’s dollars). In some ways, Richard Sears’ and Julius Rosenwald’s contrasting business styles provided Sears, Roebuck and Co. with the ideal mixture of business skills—the creative and the practical—but those same differences also resulted in frequent disagreements between the two men. Sears’ quest for more and more sales without regard for the associated management responsibilities that came with them,
T H E E L K S M A G A Z I N E 69
PHOTO: © 2012 SEARS BRANDS, LLC. ALL RIGHTS RESERVED.
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