Reaching its silver anniversary in 1927, the J.C. PenneyCompany found many reasons to celebrate. The amount of Penney stores had morethan doubled since 1920 to more than 750 locations “in practically every Statein the Union” according to the New York Times (close to it - 45 of the then 48 states),and annual sales of nearly $116 million.
By this time the founder himself, James Cash Penney, hadlargely turned over leadership of the company to others while he vigorouslypursued various philanthropic interests, most importantly a program to enhanceAmerica’s agricultural production. A farm boy at heart, Penney donated millionstowards the development of dairy cattle herds, soil improvement initiatives andcrop science, particularly in the South. An October 10, 1929 article in the Atlanta Constitution summed it up asfollows: “In his breadth of vision, unselfishness of purpose and devotion tothe upbuilding of our agricultural interests, Mr. Penney is doing a work whichstamps him as one of America’s outstanding citizens”. Two weeks after the article appeared, though, came the greatWall Street crash - the prelude to years of hard times for many Americanindividuals and institutions. J.C. Penney the company weathered the depressionreasonably well, although it would be five years before it again reached thelofty peak of its 1929 sales of $209 million. For J.C. Penney the man, however,those years were devastating.
As it happened, Penney literally “gave away” his personalfortune during the 20’s and early 30’s, funding the various farm interests and othergood causes to the tune of millions, with little awareness of the increasing gravityof the country’s (and his own personal) economic situation. In 1931, Penney’slawyers advised him he was “virtually broke”, a story recounted in author Bill Hare’s“Celebration of Fools: An Inside Look at the Rise and Fall of JCPenney”, arattling read. A number of top Penney managers, in an effort led by Penneypresident Earl Sams, pooled money to buy the founder a new set of shares in ownnamesake company, and for the first time in years the company paid him a salary.These were the first steps towards setting Penney, “an incalculable asset tothe company that (he) founded and built”, as Hare wrote (in Sams’ voice), backon his feet. “After three years he would cease taking the salary, and by 1940,when the company declared a dividend of $5 per share, he owned 51,000 of them. Butthe going was rough at first.” This incident also sparked a much-publicized spiritual awakeningin the despondent Penney’s life, which occurred during a visit to the famed BattleCreek (Michigan) Sanitarium, founded by John Harvey Kellogg (brother of W.K.Kellogg, the cereal king). Mary Elizabeth Curry, in her fine book Creating AnAmerican Institution: The Merchandising Genius of J.C. Penney, tells the storyof one early morning when Penney walked the halls of the sanitarium andoverheard a chapel service where an old hymn called “God will take care of you”was being sung. Penney joined the service, “and asked God to help him, and whatoccurred next was so personally dramatic he liked to call if a miracle. He feltas though a heavy burden, all his fears and worries, had immediately lifted fromhis shoulders”, Curry writes. Penney himself wrote numerous books and gavehundreds of talks on the subject in the ensuing decades, alongside and as part ofhis emissary work for the company. Penney was by no means the only “famousbusinessman - preacher” of his time, but certainly among the best known. Such a combination is relatively rarein high profile business today.
As if the economic conditions of the 1930’s weren’t difficultenough, the Penney Company faced another hurdle in the form of the brewing “Anti-ChainStore” movement. As early as the mid-20’s there were rumblings in the pressabout the “So-Called Menace of Chain Stores”, as a December 1926 New York Timesarticle phrased it. The company generally offered a “low-key response” to suchchallenges, according to Mary Elizabeth Curry, preferring to “emphasize serviceand values for customers”. “It isn’t the purpose and it isn’t the desire forour organization or to destroy the independent merchant. Our job is to servewell a community through our plan of economic distribution”, Curry quotes aPenney executive from 1930.Push came to shove a few years later with the advent of thePatman Bill, a proposed piece of legislation that would have literally taxedmany chain store operations out of existence. Faced with this, the company wasforced to take a much stronger tack, and it was Penney’s chairman, Earl C.Sams, who took the lead in the matter, testifying before Congress in 1940. He laid out Penney’s case against the bill infive main points, as quoted in the landmark book “Chain Stores in America1859-1950” by Godfrey M. Lebhar: “1) It would destroy the Penney company or anysimilar company. 2) It would destroy the finest field of opportunity that hasever existed in retailing for the young ambitious man born without familymeans. 3) It would add to the cost of living for every American family oflimited means and would lower the American standard of living. 4) It would deala staggering blow to the entire economic life of this country and would beespecially destructive of the smaller cities and towns for the benefit oflarger cities. 5) It would hurt and tax this entire nation for the protectionand enrichment of a small minority of self-interested middlemen and of anothersmall minority group of ill-advised marginal retailers.”
Beyond that, Sams attempted to debunk the theory “that chainstores were ruining the smaller communities”. The real culprit, he maintained,was the proliferation of quality, paved roadways that now enabled Americans totravel far afield to shop – no longer were they captive to the ‘local townsquare’ for the necessities of life. On the contrary, the chain stores hadindeed served “as a check on the drying up of towns and small cities”(Godfrey’s words) because according to Sams, “(they) have brought to these small centers the same values, thesame crisp new styles, and the same modern stores that were available in thebigger cities. And the customers know it.” As it turned out, the arguments putforth by Sams and others did much to swing public opinion to the chains’ side.On June 17, 1940, Patman’s “chain store death sentence” bill “suffered thedeath sentence itself”, Godfrey wrote, when it was killed in committee, neverto reach the House floor for a vote. While J.C. Penney was known (and would continue to be forsome time) as a “small town chain” despite its impressive sales and burgeoningstore count, there were a growing number of exceptions to the “small town”aspect. In 1931, the company opened its largest store to date in Seattle, a newbuilding on the former site of the Bon Marché flagship department store. (Someyears later, Penney’s San Francisco unit would claim the distinction of largeststore.) Around this time Penney opened other large stores in key Westerncities, including Oakland, Ogden (Utah), Salt Lake City and Reno, all of which“(did) a large volume of business”, as the New York Times put it at the time.
From the mid-30’s to the mid-50’s Penney sales volume, fromstores large and small, ballooned from $225 million to over $1.3 billion. Aninteresting side note, related in a September 1950 Fortune magazine article entitled“Penney’s, King of the Soft Goods”, was the way Penney store managers shared inthe company’s good fortune, no pun intended. (Granted, they shouldered a greatdeal of responsibility, including all hiring, training, advertising decisions andordering of all products stocked – no merchandise was “pushed” on a Penneystore by the home office in those days.) The rewards were substantial, however- “A good manager in a fairly large store can make fancy money” (“fancy”meaning 1/3 of the store’s after-tax net –yikes!), the article said, citing theexample of the aforementioned Seattle store’s manager who pulled $125,000 inone year. The plan was later modified to allow assistant managers and other keyemployees to share in the pie. Still, a good many managers earned $30 to 50,000a year, and nearly a third (of then 1,600 store managers) raked in at least$15,000 annually – fancy money indeed when nice houses could be had in most cornersof America for well below ten grand. By 1950 J.C. Penney was a solid third place in America’sdepartment store sweepstakes, behind the mighty Sears, Roebuck & Co. andthe faltering yet still formidable Montgomery Ward. One of the keys to continuedgrowth, the Fortune magazine article surmised, was increased presence in theEastern half of the country. Up to that time, Penney was still thought of as a Westernretailer (with “a Penney store in practically town above 5,000 and many smallerones”) despite recent inroads into some key Eastern and Midwestern markets. “Inthe East, nobody knows a damn thingabout the Penney Co.”, one manager was quoted as saying. To be sure, building up the Penney reputationto the same level it enjoyed in the West would take time, with rough going in anumber of markets. In Camden, New Jersey for example, Penney went head-to-headwith Gimbels, Strawbridge & Clothier and Lit Brothers, “(whose) heavy advertisingpull(ed) customers away from Penney’s, not toward it”. And in Cincinnati, wherePenney opened a stunning new store in 1948, fierce competition from Shillito’s andothers kept the store in the red for nearly two years after opening, a mostunusual occurrence for Penney.
Over time, Eastern Penney store managers, many of whomstarted with the company in its native West, would adapt to the unique needs oftheir new markets. The article cites theCamden store manager, for example, who began with Penney in Spokane, Washington,transferring to Milwaukee then to Quincy, Illinois before landing at the helmin Camden, a market where a constant barrage of advertising was necessary todrive sales, a situation he hadn’t experienced in his earlier tours of duty. The manager of the Springfield, Massachusetts unit worked inPenney’s San Francisco flagship store, moving to Santa Barbara before traversingthe country to run the Springfield store. New England customers, as a rule,were very different from those in California. “In buying curtains a Californiacustomer wants to know first how wide the ruffle is, how full it is, and whatthe colors are; the Springfield customer asks whether the organdy (a type of fabricoften used in curtains) is permanently finished, how securely the ruffles aresewed on and how long it will last”. Another cited example concerned towels, thenas now one of Penney’s strongest product lines. Whereas bath towels typically outsoldface towels 2 to 1 “presumably because a bath towel can serve either purpose”,in the Springfield store the opposite was true. The manager was undecided as to“whether the frugal New Englanders use face towels after they bathe, or whetherthey are just trying out Penney face towels before shooting the moon and buyingthe larger size.” (They also tended to say “ayuh” when responding affirmativelyto questions, a point the article curiously omits.)
In any event, Americans were buying more face towels, bathtowels, washcloths and all manner of other linens from their local J.C. Penneystore than anywhere else, in addition to clothes for the whole family. “King ofthe Soft Goods”, indeed, but big changes lie ahead.The first four photos above appear by courtesy of the J.C.Penney Archives at the DeGolyer Library at Southern Methodist University, thelast is from an original slide in my collection. From the 1950’s, the followinglocations are depicted: Stockton, Long Beach and Glendale, California, followedby Rockwood, Tennessee (apparently a much older store, refaced) and Albuquerque,New Mexico, with a very nice hat tip to the area’s traditional adobe architecture.Note the gas stations represented in the picture – a Phillips 66 sign rightnext door, with a Conoco station across the street from it. Across the streetfrom the Penney store itself, reflected in the store windows, is what appears tobe a “Teague” Texaco. If you have a free week this summer, you can read aboutthose and more here.
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