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Monday, June 3, 2024

The Story of the Ritz Cracker Is the Story of Capitalism

The Ritz Cracker perfectly exemplifies how capitalism has enriched our lives.

Image Credit: Mike Mozart | CC BY 2.0

When you last visited the supermarket, you likely walked past a box you’ve seen many times before. The Ritz Cracker has been a staple on American store shelves for 90 years, yet today the snack is often looked down upon; its mass-produced, corporate, and carb-heavy nature has fallen out of favor in an era preferring craft-made, local, and gluten-free foods. 

But the Ritz Cracker is worth taking a second look at. There’s more to this simple snack than you might think. 

If you look at the Ritz Cracker, you’ll see its round shape with a scalloped edge and seven tiny, evenly distributed holes. The golden-brown color achieved during baking is akin to a light toast. The taste is buttery with a hint of salt, and its thin flaky layers allow it to pleasantly crumble on your tongue with little effort. Despite its buttery flavor, the Ritz Cracker is actually vegan, featuring a simple ingredient list of flour, vegetable oil, sugar, salt, and leavening. The Ritz Cracker’s design and flavor are so classic it’s now taken for granted as the almost platonic ideal of a cracker. But to truly understand the Ritz, you have to look deeper than what you can see or taste.

Where did this simple yet classic cracker come from? It was a product of the Great Depression.

A Luxury for the Masses

Life was neither easy nor fun during the Depression. The decade known as the “Roaring Twenties”—named in-part for its rapid economic growth—came to a crashing end in October of 1929. Starting then, people who had once been rich (at least on paper) became immiserated as the stock market collapsed, dropping 89.2% over the following three years. With business valuations in free-fall, unemployment skyrocketed, peaking at over 20%. In turn, homelessness spiked, and people were forced to move into shantytowns filled with tents, sheds, and cardboard shelters.

The release of a new snack product during this era should, by all logic, have been a failure. After all, this was a time when people were scraping together whatever they could to cook something edible. Mulligan stew, for example, was flavored by taking tobacco from the end of a cigarette; and lint—yes, lint—was used to add volume.

But with the Ritz Cracker, Nabisco wasn’t just selling a snack—they were selling hope. Nabisco executive Sydney Stern picked the name “Ritz” to signify luxury. “Ritz” and “ritzy” had become common parlance for “fancy” following the success of luxury hotelier César Ritz and his Ritz-Carlton hotels. While Stern’s fellow Nabisco executives were skeptical this name would connect with customers in this era, Stern argued the opposite; naming the cracker “Ritz” would help remind people of better days, give them a taste of the high life, and provide a sense that the world would get back on track. Despite the fancy name, the Ritz Cracker was a snack for the masses. Sold for only 19 cents a box ($4.43 in 2024 dollars), its original marketing slogan was “An affordable taste of luxury.”

Before capitalism, the very idea of “affordable luxury” would have been unthinkable. Under feudalism, luxury was for the wealthy, not the masses. As the economist Ludwig von Mises explained:

Before the advent of capitalism, a man’s social status was fixed from the beginning to the end of his life; he inherited it from his ancestors, and it never changed. … As for manufacturing, the primitive processing industries of those days existed almost exclusively for the benefit of the wealthy. Most of the people (ninety percent or more of the European population) worked the land and did not come in contact with the city-oriented processing industries. …However, as the rural population expanded, there developed a surplus of people on the land. … The numbers of these “outcasts” continued to grow, and still no one knew what to do with them. …

Out of this serious social situation emerged the beginnings of modern capitalism. … Innovators did not produce expensive goods suitable only for the upper classes; they produced cheaper products for everyone’s needs. And this was the origin of capitalism as it operates today. It was the beginning of mass production, the fundamental principle of capitalistic industry. Whereas the old processing industries serving the rich people in the cities had existed almost exclusively for the demands of the upper classes, the new capitalist industries began to produce things that could be purchased by the general population. It was mass production to satisfy the needs of the masses.

This is the fundamental principle of capitalism as it exists today in all of those countries in which there is a highly developed system of mass production: Big business, the target of the most fanatic attacks by the so-called leftists, produces almost exclusively to satisfy the wants of the masses. Enterprises producing luxury goods solely for the well-to-do can never attain the magnitude of big businesses.

Indeed, the crumbly butter-flavor of the Ritz Cracker was a luxury for the masses, purchased by both impoverished Americans and by upscale hotel patrons at Manhattan’s Waldorf-Astoria. Mass production of the Ritz Cracker began in Nabisco’s North Philadelphia bakery, and was introduced to Philadelphia and Baltimore test markets on November 21, 1934. By 1935, it was distributed nationally. Within its first year, Nabisco sold five million crackers. After three years, they were baking twenty-nine million daily, making it the best selling cracker in the world.

From Rags to Riches

Making luxury available to the masses is not the only world-changing effect of capitalism revealed in the story of the Ritz Cracker. The story also highlights how capitalism enabled social mobility for the individual. As Mises further explained:

In the Middle Ages—and in many countries even much later—a family could be an aristocrat family and possess great wealth, it could be a family of dukes for hundreds and hundreds of years, whatever its qualities, its talents, its character or morals. But, under modern capitalistic conditions, there is what has been technically described by sociologists as “social mobility.” The operating principle of this social mobility, according to the Italian sociologist and economist Vilfredo Pareto, is “la circulation des élites” (the circulation of the elites). This means that there are always people who are at the top of the social ladder, who are wealthy, who are politically important, but these people—these elites—are continually changing.

In a capitalist society, there is continuous mobility—poor people becoming rich and the descendants of those rich people losing their wealth and becoming poor. …

Everyone is free to change his status. That is the difference between the status system and the capitalist system of economic freedom, in which everyone has only himself to blame if he does not reach the position he wants to reach. …

Every day, the New York Times prints long notices of people who have died. If you read these biographies, you may come across the name of an eminent businessman, who started out as a seller of newspapers at street corners in New York. Or he started as an office boy, and at his death he was the president of the same banking firm where he started on the lowest rung of the ladder.

Consider the story of the Ritz Cracker’s namesake, César Ritz.

César Ritz was born in 1850 in the tiny Swiss village of Niederwald. He was the youngest of thirteen children born to poor peasant parents. At age twelve, his parents sent him away to a Jesuit-run boarding school, but César showed little interest in his classes. However, noticing his creative potential, at age 15 his parents pulled him out of school and sent him to apprentice as a sommelier at a hotel. He was quickly fired, with the patron of the hotel telling César, “You’ll never make anything of yourself in the hotel business. It takes a special knack, a special flair, and it’s only right that I tell you the truth—you haven’t got it.”

Nonetheless, César persevered in the hotel industry. He solved problems with his creativity, such as heating bricks in the hotel restaurant’s oven and placing them at tables to continue serving guests when the hotel’s heat stopped working on a frigid day. César’s talent got him promoted into management. As a manager, he saved Lucerne’s Grand National Hotel from bankruptcy by implementing an innovative reward system to better motivate his staff. From there, César began buying struggling hotels and turning them around, attracting world-leaders as his guests in the process. By 1900, César was seen as the number-one hotel expert in the world. Not long after his death in 1918, the name Ritz became synonymous with glamor.

The rags-to-riches story of César Ritz was not the only one of its kind in the making of the Ritz Cracker. Nabisco’s marketing executive Sydney Stern was another such case. 

Sydney was the child of Hungarian-Jewish immigrants, and was raised with his six siblings in a tenement building in lower Manhattan. In tenements, entire families would live in a single room, those rooms often had no light or ventilation, and the infant mortality rate was one in ten. Nonetheless, Sydney and his siblings would all go on to find professional success.

But even after getting out of the tenement, life wasn’t easy. Sydney’s wife died after childbirth, leaving him alone to raise three young children. His decision to take a job at Nabisco—a nine-to-four job with a steady paycheck—was driven by this situation. At Nabisco, Sydney excelled as a commercial artist. He not only named and designed the logo for the Ritz Cracker, but also the iconic box for Animal Crackers. Sydney’s work contributed to commercial art becoming seen as culturally significant, and by the end of his life was frequently exhibited in gallery shows. Obituaries for him were published in the New York Times and the LA Times; both led with the word “Ritz.”

Nabisco’s founder Adolphus W. “AW” Green was yet another example

AW was the youngest of eleven children. His father died while AW was a child, forcing his mother to take boarders into their home to get by, but she managed to put together enough money to support her children’s education. AW was smart; he was accepted into an elite private high school, and graduated Harvard at age twenty in the top quarter of his class. His first job after graduating was at a private library, where AW read voraciously and was quickly promoted to head librarian. Thanks to the contacts he made at the library, AW was offered a job as a clerk at a prestigious law firm. There he learned from the top attorneys in the United States, and went on to start his own law firm.

But this was just the start for AW’s career. His road from lawyer to Nabisco CEO also reveals the incredible power of capitalism.

Economies of Scale

After being approached for legal assistance by cracker bakers, AW became an expert on the industry. He realized that each city only had one or two cracker bakeries; they used labor-intensive production methods, and only sold their goods to stores up to a few miles away. At those stores, crackers were sold loose in barrels, where customers would scoop them into bags. However, moisture regularly sank to the bottom of barrels, leaving a soggy mess full of insects and rodents. One anecdote from the era recalls a store owner who was accused of having rats in his cracker barrel; he replied, “That’s impossible, because the cat sleeps there.”

AW realized the cracker industry was ripe for innovation. Thanks to the rise of railroads, crackers (which had a longer shelf-life than bread) could be sold nationwide. AW worked to merge forty bakeries in thirteen states into the American Biscuit and Manufacturing Company, founded in 1890. AW wasn’t the only one thinking along these lines; the New York Biscuit Company was a competing merger founded the same year. In 1898, these two companies merged into the even larger National Biscuit Company, later renamed “Nabisco.” The company controlled over half of America’s cracker and cookie industry.

These mergers were conceived as a “trust,” a merger of businesses in an attempt to monopolize an industry. Trusts were—and continue to be—widely despised, as they’re perceived as harming consumers. This perception led trusts to be regulated under the Sherman Antitrust Act and other laws to follow. However, far from harming their customers, the economies of scale created in the merging of Nabisco benefited customers greatly. As Mises explained:

Fifty or sixty years ago it was said in almost all capitalist countries that the railroad companies were too big and too powerful; they had a monopoly; it was impossible to compete with them. It was alleged that, in the field of transportation, capitalism had already reached a stage at which it had destroyed itself, for it had eliminated competition. What people overlooked was the fact that the power of the railroads depended on their ability to serve people better than any other method of transportation. Of course it would have been ridiculous to compete with one of these big railroad companies by building another railroad parallel to the old line, since the old line was sufficient to serve existing needs. But very soon there came other competitors. …

In the United States the competition to the railroads—in the form of buses, automobiles, trucks, and airplanes—has caused the railroads to suffer and to be almost completely defeated, as far as passenger transportation is concerned.

Knowing the cracker industry was still in competition with every other food a consumer could buy, AW kept prices low, only a nickel per package (Approx. $1.89 in 2024 dollars) after the merger. And he was dedicated to developing the best cracker recipes and designs. Under AW’s leadership, Nabisco developed the wax paper sleeves that Ritz and other crackers are commonly sold in, keeping them fresh for longer.

With Nabisco, gone were the days of the soggy and unsanitary cracker barrel; in its place came the ability to sell the best crackers that could be produced by any of the original bakeries nationwide, in protective packaging, at low cost. The end of the cracker barrel era was so significant to consumers that Nabisco’s early advertising—developed in large part by AW himself—featured a character in a raincoat, meant to communicate that their crackers would stay dry.

Despite the public panic over trusts, few were actually very successful. Nabisco was an exception. Within two years of Nabisco’s merger, Americans were buying ten million packages of crackers per month, earning Nabisco $3 million in annual profits on sales of $35 million. This profit enabled AW to further build his company by attracting the best possible staff. He actively sought to make Nabisco’s bakeries better places to work, offering benefits and stock options.

But not all of the bakeries which merged into Nabisco ended up happy with AW’s tight control over the business, so some bakers left to find independent success. Nabisco’s biggest competitor for many years was the Loose-Wiles Biscuit company, founded by two brothers that chose to leave Nabisco. The Ritz Cracker itself was developed and marketed to compete with Loose-Wiles’ successful and similar Hi Ho cracker.

AW died in 1917, before the Ritz Cracker was introduced. But in his absence, capitalism continued to push the company forward.

Nabisco was, until 1945, slow to adopt new baking techniques, causing it to fall behind to competitors, who had moved to a conveyor-belt baking system. Shareholders, who have an interest in ensuring the company they own a piece of is well managed, chose to replace the company’s CEO with someone who would shake things up. Changes were necessary for Nabisco’s products to continue being the crackers of choice for consumers. These changes were made, and Nabisco skyrocketed to success yet again. The company expanded internationally, and by 1972 became a billion-dollar corporation. 

On an international playing field, it became clear the economies of scale achieved by bakeries merging into Nabisco could be improved even further. Nabisco thus merged with Standard Brands, producer of Planters Peanuts. The merged company was soon purchased by another company, and then another. 

But under capitalism, bigger isn’t always better. In the real world, capitalism doesn’t work like the board game Monopoly suggests. Diseconomies of scale also exist, in which the costs from a firm’s large size—its unwieldiness to manage, reduced nimbleness, difficulty calculating how to properly allocate resources between departments, and more—outweigh the advantages offered by conglomeration. As the economist Murray Rothbard explained, “We do not know, and economics cannot tell us, the optimum size of a firm in any given industry…any existing situation on the free market will tend to be the most desirable for the satisfaction of consumers’ demands.”

Thus, Nabisco and Kraft Foods were spun off by their mutual owner in 2006 into an independent Kraft/Nabisco company. In 2012, Kraft/Nabisco would again spin off into two smaller enterprises, separating their grocery business from their snack business. The snack product company, Mondelēz International, carries Nabisco’s brand and products into the present day. Mondelēz International is valued at approximately $100 billion. The company continues to list AW Green as one of its founders.

While all this was going on, the Ritz Cracker itself was also pressed to adapt to changing times. To suit constantly shifting consumer preferences, Nabisco developed a wide variety of products innovating from the original Ritz Cracker. There are currently 48 different Ritz products for sale. Ritz Peanut Butter Sandwiches, Ritz Cheese Cracker Sandwiches, Ritz Bits, Ritz Roasted Vegetable Crackers, Ritz Whole Wheat Crackers, Ritz Crackers with less salt, Ritz Crackers in smaller sleeves, “buttery-er” Ritz Crackers, and more.

The Ritz Cracker Is Still Ritzy

Despite the incredible progress of the Ritz Cracker and Nabisco over their history, the cracker has lost its once-luxurious image. But ask yourself: is that the Ritz Cracker’s fault? The original Ritz Cracker is still for sale today, tasting about the same as it did when it was first released. What changed was everything around it: competing products vying to better serve your desires, increased dietary knowledge made possible by capitalism-driven progress in medicine, science, and technology, plus advancements in sanitation making locally-produced foods far more appealing than in the days of the cracker barrel.

This process isn’t over, and will never end. Capitalism continues to drive businesses to better provide for your contemporary desires, whatever they may be. Mondelēz International’s latest acquisition is Tate’s Bake Shop, a once family-owned cookie company making gluten-free products. Even under Mondelēz International’s ownership, the brand’s marketing continues to focus on the bake shop’s small-town roots, and the original Tate’s Bake Shop store remains open. No longer just available in that store, now their cookies are available in groceries around the world.

It’s easy to take the Ritz Cracker for granted in the current era. After all the progress capitalism has enabled, we often forget how far we’ve come and what it took to make today’s world possible. But instead of looking down at our past, we ought to regard it with gratitude. Finding joy in the little things, as Depression-era consumers found in the Ritz Cracker, is a hallmark of wisdom. And witnessing how creating value for others can take us from privation to prosperity, even through something as simple as a cracker, should serve as a perpetual wellspring of hope and inspiration. Yes, the Ritz Cracker is a mass-produced product, but so it must be to fulfill the desires of masses across nations.

So whatever snack you choose to eat today, be sure to recognize the Ritz Cracker as the marvel of capitalism it truly is.


  • Joseph (Jake) Klein is a former Curriculum Manager and Content Creator at FEE. Jake is the co-founder of The Black Sheep, a publication dedicated to promoting open inquiry on controversial topics.