The Man Who Followed the Golden Rule- The JC Penney Story

Posted by hughrandle@gmail.com on July 18, 2012 at 12:45 AM

Once upon a time, the experience of going to the store was based on a win win scenario. The retailer provided excellent quality at reasonable prices and the consumer, who could actually pay cash traded their hard earned money for an item of need. The rule of thumb was the Golden Rule: Do unto others as you would have them do unto you. Many shoppers long for those days, before the suspicion that they were being ripped off or sold inferior goods. As for the shopkeeper, they longed for the days when a person didn’t come in, purchase something on credit, and then renege on the agreement. One such retailer actually ran a group of stores called The Golden Rule Stores. His name? James Cash Penney. You may know him better as J.C. James Cash Penney was born September 16, 1875 in Hamilton, Missouri. His father was a minister, but also a farmer and was often short of money. When Penney was 8, his father put him on notice that the boy would be supplying his own clothes from that time on. With an entrepreneurial mind already in place, young J.C. worked on raising pigs to sell, training horses and growing and selling watermelons. After high school graduation, Penney worked in a dry goods store starting at $25 per year and within two years working his way up to $ 300 per year. As successful as he had become at this early age, he also was beset with health issues. He was diagnosed with tuberculosis. His physician recommended a drier climate, so in 1897, he went out to Colorado. He purchased a butcher shop and set up shop in Longmont, Colorado. As with many of the people that I write about who attained great success, J.C. Penney also had the setback of a business failure in 1898 when his butcher shop closed, reportedly because Penney wouldn’t supply free liquor to the chef of the local hotel- his largest client. In 1899, Penney moved back in to the dry goods business accepting a $50 per month job in Callahan and Johnson’s store in Evanston , Wyoming. Within 2 years, Penney used $500 of his own money and $2000 in borrowed funds and opened his first “Golden Rule” store in Kemmering, Wyoming. After showing a fantastic profit in his first year, he spent the next several years adding locations and buying out Callahan and Johnson. By 1909, he had set up a pattern of having his managers save up 1/3 of the capital necessary to open a new location and then lending the additional two thirds, much as he had started. Due to this shrewd business planning, he had fully invested employees and well motivated managers. He left his initial Kemmering store and moved to Salt Lake City where he set up a company headquarters. By 1913, he moved the company to New York City to be closer to his suppliers and he had developed 28 stores, mostly in Oregon, Nebraska, Utah, Nevada and Idaho. He incorporated his stores as J.C. Penney, Inc after the Golden Rule name had been stolen by unscupulous competitors. During the 1920‘s and 30‘s, J.C. Penney stores sprung up on Main Streets throughout the country. In fact by 1932, there were 1473 locations. The company came through the Great Depression with barely a scratch. Penney, however, was not as fortunate. He was about to endure another great hardship. Poor investments in Florida real estate caused Penney to lose much of his $40 million dollar fortune. He suffered what many believed to be a nervous breakdown and spent a brief time at the Kellogg Sanitarium in Battle Creek Michigan. "I was at the end of my rope," he said later. "My business had crumbled, my communications with colleagues had faltered, and even my . . . wife and our children were estranged from me. It was all my fault." He was even contemplating suicide. It was then that he decided direct all of his attentions back into his business. He went back to his “Penny Idea” that had served him so well during the early days of the company. Here is the Penny Idea: To serve the public as nearly as we can to its complete satisfaction. To expect for the service we render a fair remuneration, and not all the profit the traffic will bear. To do all in our power to pack the customer's dollar full of value, quality and satisfaction. To continue to train ourselves and our associates so that the service we give will be more and more intelligently performed. To improve constantly the human factor in our business. To reward men and women in our organization through participation in what the business produces. To test our every policy, method and act in this wise: Does it square with what is right and just? --James Cash Penney, 1913 It is also during this time that Penney restrengthened his Christian beliefs. Although born to a minister, and always a moralist, Penney began to run his business by biblical principles and contributed to a number of Christian organizations. He rejoined the board of directors of his company as chairman of the board and remained there until 1958. After that, he remained on the board until his death. James Cash Penney had a goal to live until he was 100 years old. He was active during his 80‘s and early 90‘s visiting store locations. He lived to see the development of regional malls and watch Penneys thrive in that environment. He abandoned his 50 year old “cash only” rule and developed the stores own credit card. James Cash Penney did not live to see 100 years old. He died February 12, 1971 at age 95. The company he left behind was over 1300 stores strong with over 100,000 employees and 10 billion dollars in business. His inspiring story is one that we all can learn from. Persistence, hard work, overcoming obstacles and learning to come back are all lessons from the life of James Cash Penney. His was a life of several tragedies. He lost two wives at a young age and his personal fortune at an age when most men were contemplating retirement. The way he handled those tragedies reflected much of the character of the man. After his first wife died, he donated $10,000 in her name to their church. When his second wife died, he set up the J.C. Penney Foundation in her name to assist with adoptions, vocational schools and the education of youth. Along with his third wife, J.C. Penney donated to over 100 charitable organizations during his lifetime. J.C. Penney stores as of this writing are going through some of the toughest times they’ve ever faced. They are in the midst of falling profits, angry investors and a complete change in the set of their sail. Perhaps a look back at Penney’s “Golden rule” philosophy and a return to the Penney Idea, will right the large ship that today is the J.C. Penney company.