Reaching its silver anniversary in 1927, the J.C. Penney
Company found many reasons to celebrate. The amount of Penney stores had more
than doubled since 1920 to more than 750 locations “in practically every State
in 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, had
largely turned over leadership of the company to others while he vigorously
pursued various philanthropic interests, most importantly a program to enhance
America’s agricultural production. A farm boy at heart, Penney donated millions
towards the development of dairy cattle herds, soil improvement initiatives and
crop science, particularly in the South.
An October 10, 1929 article in the Atlanta Constitution summed it up as
follows: “In his breadth of vision, unselfishness of purpose and devotion to
the upbuilding of our agricultural interests, Mr. Penney is doing a work which
stamps him as one of America’s outstanding citizens”.
Two weeks after the article appeared, though, came the great
Wall Street crash - the prelude to years of hard times for many American
individuals and institutions. J.C. Penney the company weathered the depression
reasonably well, although it would be five years before it again reached the
lofty 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 personal
fortune during the 20’s and early 30’s, funding the various farm interests and other
good causes to the tune of millions, with little awareness of the increasing gravity
of the country’s (and his own personal) economic situation. In 1931, Penney’s
lawyers 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”, a
rattling read. A number of top Penney managers, in an effort led by Penney
president Earl Sams, pooled money to buy the founder a new set of shares in own
namesake 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 to
the company that (he) founded and built”, as Hare wrote (in Sams’ voice), back
on 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. But
the going was rough at first.”
This incident also sparked a much-publicized spiritual awakening
in the despondent Penney’s life, which occurred during a visit to the famed Battle
Creek (Michigan) Sanitarium, founded by John Harvey Kellogg (brother of W.K.
Kellogg, the cereal king). Mary Elizabeth Curry, in her fine book Creating An
American Institution: The Merchandising Genius of J.C. Penney, tells the story
of one early morning when Penney walked the halls of the sanitarium and
overheard 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 what
occurred next was so personally dramatic he liked to call if a miracle. He felt
as though a heavy burden, all his fears and worries, had immediately lifted from
his shoulders”, Curry writes. Penney himself wrote numerous books and gave
hundreds of talks on the subject in the ensuing decades, alongside and as part of
his emissary work for the company. Penney was by no means the only “famous
businessman - preacher” of his time, but certainly among the best known. Such a combination is relatively rare
in high profile business today.
As if the economic conditions of the 1930’s weren’t difficult
enough, the Penney Company faced another hurdle in the form of the brewing “Anti-Chain
Store” movement. As early as the mid-20’s there were rumblings in the press
about the “So-Called Menace of Chain Stores”, as a December 1926 New York Times
article phrased it. The company generally offered a “low-key response” to such
challenges, according to Mary Elizabeth Curry, preferring to “emphasize service
and values for customers”. “It isn’t the purpose and it isn’t the desire for
our organization or to destroy the independent merchant. Our job is to serve
well a community through our plan of economic distribution”, Curry quotes a
Penney executive from 1930.
Push came to shove a few years later with the advent of the
Patman Bill, a proposed piece of legislation that would have literally taxed
many chain store operations out of existence. Faced with this, the company was
forced 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 in
five main points, as quoted in the landmark book “Chain Stores in America
1859-1950” by Godfrey M. Lebhar: “1) It would destroy the Penney company or any
similar company. 2) It would destroy the finest field of opportunity that has
ever existed in retailing for the young ambitious man born without family
means. 3) It would add to the cost of living for every American family of
limited means and would lower the American standard of living. 4) It would deal
a staggering blow to the entire economic life of this country and would be
especially destructive of the smaller cities and towns for the benefit of
larger cities. 5) It would hurt and tax this entire nation for the protection
and enrichment of a small minority of self-interested middlemen and of another
small minority group of ill-advised marginal retailers.”
Beyond that, Sams attempted to debunk the theory “that chain
stores were ruining the smaller communities”. The real culprit, he maintained,
was the proliferation of quality, paved roadways that now enabled Americans to
travel far afield to shop – no longer were they captive to the ‘local town
square’ for the necessities of life. On the contrary, the chain stores had
indeed 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, the
same crisp new styles, and the same modern stores that were available in the
bigger cities. And the customers know it.” As it turned out, the arguments put
forth 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 the
death sentence itself”, Godfrey wrote, when it was killed in committee, never
to reach the House floor for a vote.
While J.C. Penney was known (and would continue to be for
some time) as a “small town chain” despite its impressive sales and burgeoning
store 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 new
building on the former site of the Bon Marché flagship department store. (Some
years later, Penney’s San Francisco unit would claim the distinction of largest
store.) Around this time Penney opened other large stores in key Western
cities, 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, from
stores large and small, ballooned from $225 million to over $1.3 billion. An
interesting 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 in
the company’s good fortune, no pun intended. (Granted, they shouldered a great
deal of responsibility, including all hiring, training, advertising decisions and
ordering of all products stocked – no merchandise was “pushed” on a Penney
store 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 the
example of the aforementioned Seattle store’s manager who pulled $125,000 in
one year. The plan was later modified to allow assistant managers and other key
employees to share in the pie. Still, a good many managers earned $30 to 50,000
a 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 corners
of America for well below ten grand.
By 1950 J.C. Penney was a solid third place in America’s
department store sweepstakes, behind the mighty Sears, Roebuck & Co. and
the faltering yet still formidable Montgomery Ward. One of the keys to continued
growth, the Fortune magazine article surmised, was increased presence in the
Eastern half of the country. Up to that time, Penney was still thought of as a Western
retailer (with “a Penney store in practically town above 5,000 and many smaller
ones”) despite recent inroads into some key Eastern and Midwestern markets. “In
the East, nobody knows a damn thing
about the Penney Co.”, one manager was quoted as saying. To be sure, building up the Penney reputation
to the same level it enjoyed in the West would take time, with rough going in a
number of markets. In Camden, New Jersey for example, Penney went head-to-head
with Gimbels, Strawbridge & Clothier and Lit Brothers, “(whose) heavy advertising
pull(ed) customers away from Penney’s, not toward it”. And in Cincinnati, where
Penney opened a stunning new store in 1948, fierce competition from Shillito’s and
others kept the store in the red for nearly two years after opening, a most
unusual occurrence for Penney.
Over time, Eastern Penney store managers, many of whom
started with the company in its native West, would adapt to the unique needs of
their new markets. The article cites the
Camden store manager, for example, who began with Penney in Spokane, Washington,
transferring to Milwaukee then to Quincy, Illinois before landing at the helm
in Camden, a market where a constant barrage of advertising was necessary to
drive sales, a situation he hadn’t experienced in his earlier tours of duty.
The manager of the Springfield, Massachusetts unit worked in
Penney’s San Francisco flagship store, moving to Santa Barbara before traversing
the country to run the Springfield store. New England customers, as a rule,
were very different from those in California. “In buying curtains a California
customer wants to know first how wide the ruffle is, how full it is, and what
the colors are; the Springfield customer asks whether the organdy (a type of fabric
often used in curtains) is permanently finished, how securely the ruffles are
sewed on and how long it will last”. Another cited example concerned towels, then
as now one of Penney’s strongest product lines. Whereas bath towels typically outsold
face 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 whether
they are just trying out Penney face towels before shooting the moon and buying
the larger size.” (They also tended to say “ayuh” when responding affirmatively
to questions, a point the article curiously omits.)
In any event, Americans were buying more face towels, bath
towels, washcloths and all manner of other linens from their local J.C. Penney
store than anywhere else, in addition to clothes for the whole family. “King of
the 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, the
last is from an original slide in my collection. From the 1950’s, the following
locations are depicted: Stockton, Long Beach and Glendale, California, followed
by 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 right
next door, with a Conoco station across the street from it. Across the street
from the Penney store itself, reflected in the store windows, is what appears to
be a “Teague” Texaco. If you have a free week this summer, you can read about
those and more here.
