Russian-born Samuel Klein (1886–1942) founded S. Klein in 1905, or around 1912, on the block of Union Square East, between 14th and 15th Streets (in the former
Union Square Hotel). Because of S. Klein's position as an important downscale store, Klein was one of the few businesspeople to increase his profits during the
Great Depression as consumers became more cautious spenders and sought lower prices; Klein made over $1 million of profit every year during the Depression. To maintain low prices, S. Klein relied on very fast
inventory turnover and low
overhead costs; rent and staff salaries amounted to just 6-7% of the store's profits. As was common at downscale stores at the time, S. Klein struggled with
shoplifting. Up to $100,000 of stock was stolen every year, partly because customers
served themselves unlike in more expensive stores. Large posters were placed on the walls inside the store warning "Dishonesty Means Prison" in five different languages, although it is contested whether Klein actually prosecuted all those caught shoplifting or not. Unruly behaviour was also a problem, especially during sales when customers would try and buy as much as possible.
Albert Halper described one instance where "crowds of women were ... storming all the entrances to Klein's ... overturning tables stacked with handbags and blouses." Security guards were employed to try and prevent disruption. Although there was no
de jure racial segregation, S. Klein sought to only serve white customers.
Benjamin Davis was told by one store worker that employees at Klein's and the neighboring store Ohrbachs, were encouraged to "insult Negro patrons so that they won't come back again". ==Suburban growth==