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Skagit River Journal

of History & Folklore
Subscribers Edition
The most in-depth, comprehensive site about the Skagit
Covers from British Columbia to Puget Sound. Counties covered: Skagit, Whatcom, Island, San Juan, Snohomish & BC. An evolving history dedicated to committing random acts of historical kindness

Noel V. Bourasaw, editor

810 Central Ave., Sedro-Woolley, Washington, 98284
Home of the Tarheel Stomp

Mortimer Cook slept here & named the town Bug

J.C. Penney 75th Anniversary book, 1977

A young John Cash Penney

At 23, Jim Penney had to leave the Missouri climate for his health. He moved to Colorado and took a job in a dry goods store working for I.M. Callahan, who was so impressed he soon referred the promising new clerk to his partner, Guy Johnson.
"You make good with Johnson," Callahan told young Penney, "and maybe someday you'll have a store of your own, and we'll be partners." When Johnson and Callahan offered the young man a share in a new store in Kemmerer, Wyoming in 1902, they figured the cost of opening the store would be $6,000, or $2,000 for each partner. Mr. Penney was anxious to accept the offer, but he had to confess that he had only the $500 that he had saved out of his salary.
"Don't worry," the men told him. "We'll loan you the $1,500 you need — at the going rate of 8 percent interest, of course." Before closing the deal, Mr. Penney decided to write to a bank in Hamilton, Missouri his home town. He detailed the opportunity, the history of the Johnson and Callahan stores, his own increasing wages. He pointed out that he had saved $500 and was investing it. He planned to cut his own salary to $75 a month, but would get one-third of the profits of the new store. The bank felt confidence in the venture and offered Mr. Penney the much needed $1,500 at 6 percent interest. Johnson and Callahan asked their new partner why he went to the trouble of contacting the bank instead of accepting their own offer.
"To save 2 percent," replied the frugal young man. "All it cost me was a postage stamp, and I saved $30."

This biography is linked directly with the profile of Gust Gilbertson, who came to Sedro-Woolley in 1915 to open store number 83 in the J.C. Penney chain.

Mr. Penney repaid the loan in full at the end of the first business year. He had his interest in the store free and clear, had money in the bank, and owed no one.
Five years later, in 1907, Johnson and Callahan decided to dissolve their partnership, selling their interests in the three-store chain (Rock Springs, Wyoming and Cumberland, Wyoming opened in 1902 and 1903 respectively) for $30,000. Jim Penney bought them out, giving his note for one year, carrying 8 percent interest, for the full amount.
"You will have to accept my name on this note as your only guarantee of payment," he told them as he prepared to sign the paper. "I will not give you a lien on the stock in any of the stores because you know, as well as I do, that to do that would hurt my credit." Callahan and Johnson accepted those terms, and at the age of 32, J.C. Penney, as he had begun to sign his name, was in business for himself.

This is a drawing of the original Kemmerer, Wyoming, Golden Rule where John Cash Penney started in a partnership in 1902. It was a former grocery store in the coal mining town, with only one large room and no plumbing.

First store was at Kemmerer, Wyoming Mr. Penney chose Kemmerer, Wyoming to open his first store because of the people who would be his customers. The miners and ranchers of that western coal-mining town were honest and hardworking. "When you looked in their eyes, they were all there without making up starched fronts," he recalled.
The store was a rudely built one-and-a-half-story clapboard building. It was set next to a saloon in the poorest section of town and rented for $45 a month. The store measured 25 x 45 feet. A handpainted sign proclaiming it the Golden Rule hung from the front.
Prior to the opening, Mr. and Mrs. Penney spent several days preparing the store. On hands and knees, they scrubbed off molasses and oil left on the plank floors from the days when the building had been a grocery. Always fastidious, Mr. Penney swept and reswept the store, including the wooden sidewalk in front.
They bought lumber and built counters. (An original counter from that store is on permanent display in the New York office.) On one side, shelves from packing cases held an assortment of goods. Hats, dresses and coats hung from ropes strung from the shelves by hooks.
Mr. Penney was determined to work hard and succeed. Physical comforts were a secondary consideration. With no plumbing, the Penneys obtained water from a nearby Chinese restaurant. They worked by the light of kerosene lamps. An attic above the store became the family's living quarters and storeroom. Furniture was improvised — a dry goods box served as a table; shoe boxes made passable chairs.
"It was cramped and uncarpeted," said Mr. Penney. "The roof pitched so steeply, it was impossible to stand upright except in the middle. Wooden beams in the roof were exposed; the one window was small and low. We had to stoop to look out." Conditions were primitive — but it was a start.

Micro-managing stock selection Before Mr. Penney arrived in Kemmerer in March 1902, he and his partner Guy Johnson traveled to San Francisco, Denver, Kansas City, and New York to buy the store's opening merchandise. Fearing an overstock, Mr. Penney anticipated precisely what the initial stock should be. "I carefully figured the yardage of each bolt of goods, each dozen hosiery and underwear, in order that I knew just where I stood," he said.
Mr. Penney often went on buying trips to St. Louis that first year. He understood the simple and unsophisticated needs of his customers, and his merchandise reflected this. Typical stock included dresses, suits in blue, black, white, and brown, thread, needles, shoes, socks, overalls, workshirts, and a variety of yard goods. From the beginning, he stressed quality in every item he sold. "Always first quality" was his fundamental belief. The Company's policy of buying to specifications began in Kemmerer. One day, Mr. Penney wrote to a wholesaler and ordered a shipment of women's dresses, stipulating that they be made four to six inches longer in the front than in the back. The supplier complied with the unusual request but questioned the reason. Mr. Penney explained that worn as maternity dresses, they would hang "neatly and evenly." The women of Kemmerer appreciated his foresight.
Mr. Penney's method of inventory was simple yet effective. A small, clothbound ledger served as a combination inventory and buying guide. He took it with him on buying trips. On the ruled pages, entries read: "Bustles -and hip forms: Have only a few. Get something better than l5 cents. Cuff holders: Don't buy any. Fancy vests: Have none. Need a good line."
Against the advice of the local banker, Mr. Penney decided to sell for cash only. The idea of a cash-and-carry business was unheard of in a town where the accepted currency was coupons redeemed for merchandise by the mining companies against a miner's wages. But Mr. Penney persisted.
"The Golden Rule wasn't just a sign over the store," he recalled. "It meant a fair deal that would help the miners; cash for the best merchandise at the lowest prices. A miner would have something left over in case of accident or illness, because he wouldn't be tied to the cou¬pon system." Prices at the Golden Rule store were a good deal lower than those charged by the mining companies. Prices did not vary from one customer to another — one price for all. Shoes sold for $1.49, a dollar less than the going price, and were big sellers. Ladies' hats went for 49 cents; handkerchiefs were a penny each; children's dresses, 19 cents and up; men's overalls, 49 cents.
Mr. Penney's original store was founded on his inflexible and unbroken rule that merchandise offered for sale had to be the best possible value and had to be sold for less money than competitors were asking.

Customers were coal miners and sheepherders From the hardware merchant in Kemmerer, Mr. Penney learned that most of the town's 1,000 inhabitants were coal miners. The blacksmith told him the town had 21 saloons, and the grocery clerk said that sheepherders from the surrounding territory made up much of his business. Mr. Penney was about to open his first store. He was getting to know his market. On the street he buttonholed a miner whom he had once served and obtained a promise of the names of 500 other miners. A few days before opening day, he sent flyers to each family on the list, advertising his new store and promoting the savings they could make by trading there.
The day before the opening, he went from door to door personally distri¬buting handbills all over town — handbills that confirmed the savings, at cash prices, he had advertised to the 500 miners. Mr. Penney's brand of advertising was a distinctive blend of personal philosophy and advice mixed in with the merchandise information. "We push all the time," one ad proclaimed among the descriptions of boys' shoes and men's overalls. "Rust never gathers on a sword that is in use. Customers were drawn into the Golden Rule store by the promise of an up-to-date line of ladies' sateen petticoats at rock-bottom prices: 29 cents to $3.98. And for tired feet, women could buy cloth shoes for 49 cents. "$1.98 buys a nice dress shoe. $2.98 buys the handsewed and Goodyear Welt that others have the nerve to charge $4.00 for, and they are not one speck better; only a difference in the way people buy, you know."
In order to get to know the people while he publicized his goods, Mr. Penney continued to make the rounds of Kemmerer with handbills, which he supplemented by mailing posters to outlying areas. Once or twice a year he took a full-page advertisement in the local newspaper, the Kemmerer Camera, as a sort of catalog of goods, with small type and small prices, including such items as this: "Remember, we have outsize ladies' sleeveless vests, longsleeve lisle vests, lace trim pants to match for the large folks."
Mr. Penney considered himself a "dealer in merchandise of every description," and promised, "We pin our faith on honest goods, straight-forward methods and bottom prices." And the townfolk of Kemmerer were right to believe him.

Kemmerer did not have a town square, but a triangle instead, and the second location for the Golden Rule store was on one side of the triangle opposite the main street in town. This is what Gust and Julia Gilbertson would have seen when they arrived in town the first time in 1913 to manage the store for J.C. Penney.

Penney studied his customers Jim Penney used to corral miners and sheep ranchers on the streets of Kemmerer to learn their shopping habits and tell them about the Golden Rule store. He stood in the doorway and studied his customers. "They're my kind of people," he said. He knew their needs and built his business on this understanding. Mr. Penney also shopped the competition — the mining company store — to see what was selling, at what price. He jotted down notes on the effect of weather on sales.
The enthusiastic young merchant was doing his market research. In that first store, aisles were narrow and shelves were crowded. In fact, Earl Sams, the man Mr. Penney recruited as his first partner, once said, "The method of display did not impress. But Mr. Penney carefully arranged bolts of fabric on shelves, hung dresses and coats so customers could see them better, and continually straightened the merchandise set out on tables. But there wasn't room to display everything, and much merchandise remained in packing cases.
On the morning of Tuesday, April 14, 1902, in the Founder's own words, "The room was a jumble of dry goods — dresses, shoes, neckties, socks, coats, overcoats, piece goods. But it was a clean jumble." Mr. Penney was concerned about merchandise presentation.
He also cared about packaging. When a customer bought a shirt, for example, Mr. Penney folded it so as not to muss the collar and wrapped and tied the parcel with care. He frequently told his salespeople, "Every merchant has two chances at a customer — one when the sale is made and the other when the customer opens the package at home."
Mr. Penney thought about distribution of his merchandise, too, but he concluded, "Delivery is a heavy expense which would have to be added into the price of every item." His customers carried their purchases home.
He also considered the mail order business, but decided, "Mail and telephone orders are often unsatisfactory to the customers, and always expensive to handle. Our customers do their shopping in person."
In 1902, it was possible for this one man to hold all the merchandising functions of a store in his own hands and to call all the shots himself.

Truly a mom and pop business in the beginning In the annals of retailing, no payroll has ever been as uncomplicated as the Golden Rule's payroll on April 14, 1902. Only James Penney and his wife, Berta, worked the store that day. Mr. Penney made all the decisions about merchandise and pricing, and he handled the accounting and advertising — in short, he was the Company that day.
In the next few weeks, Mr. Penney found it necessary to hire clerks to help out in the increasingly successful store. The clerks earned the quite modest sum of $1.50 per day if — it was a big if — proved ambitious enough to hold on to the job. Mr. Penney demanded a lot of his clerks.
Selling meant more to James Penney than simply wrapping the item and ringing the register. He thought it a sin if a customer left the store without being waited on and without purchasing something. And if selling was Mr. Penney's way of life, the guidelines that came to be known as the Penney Idea were his personal laws.
"To continue to train ourselves and our associates so that the service we give will be more and more intelligently performed," reads the fourth item in The Penney Idea. No other principle is more strictly preached and practiced at the store level today. Although in 1977 the Company is a vastly complex operation, customer service is as much on the minds of 183,000 associates as it was on the minds of the first two.

First day's take very rewarding It was nearly midnight. The last customer had departed, and Mr. and Mrs. Penney locked the store and climbed the stairs leading to their attic home. In his hand he held a paper bag whose contents would tell the story of opening day. Once inside, the couple settled on the upended shoe boxes that served as chairs in the little room they shared with their infant son, Roswell. Light from the kerosene lamp flickered over the cascade of dimes and nickles, quarters and silver dollars as they spilled from the bag.
The first day's work paid off. Sales amounted to $466.59, almost enough to replace their lifetime savings invested in the store, almost a year's rent on the store and the attic room. Mr. Penney entered his sales records in a small red paper-bound book that had cost him five cents. The book lasted four years. In it he kept his accounts in three ruled columns per page, one for the month and day, one for shoe sales, and the last for total sales.
In order to conceal the details of his daily business from prying eyes, Mr. Penney used a private code to record his figures. The numeral 8, for example, was entered as a square symbol, and a circle with a dot in the middle represented the number 9. He entered weather conditions in the accounting book too, for weather had an important effect on sales. For November, he noted, "Quite blustery all month. Very cold, 20 degrees below. Ground was covered with snow. Moved lots of overshoes."
In time, Mr. Penney replaced the upended shoe boxes with regular chairs and the dry goods box on which he counted his first day's receipts with a proper table. But he continued to carry the daily receipts upstairs each night to be counted and carefully entered in the red-backed salesbook.

Cash only Early in the spring of 1902, James Cash Penney walked into the First National Bank of Kemmerer and asked cashier Frank Pfeiffer to open a bank account for the new Golden Rule store.
"A cash-only store can't do any business in Kemmerer," confided Pfeiffer. "The miners are paid once a month and most of them are clean out of money before the month is half over." The odds were not exactly in the young merchant's favor. For one thing, he had chosen a store that was totally bare, with only 1,125 square feet, no fixtures, and no plumbing.
In spite of the almost Spartan conditions under which the store opened, Jim Penney believed that if he could make it in Kemmerer, he could prob¬ably open stores in other mountain towns, perhaps as many as a half-dozen — in the next decade.
"Someday I am going to have a chain of dry goods stores that will cover these mountain states," he told his wife during that first year. But he also confided to her that opening six more stores would be "shooting at the moon."
Within a decade of announcing his modest dream to his wife, Mr. Penney opened 34 stores in the mountain states. In 1913, he changed the name of the stores to J.C.Penney because he felt the tag "Golden Rule" was not distinctive enough. By 1916, the 34 Penney stores had swelled in number to 127, and by the end of World War I the Company added another 70 stores in 25 states.
apid expansion followed during the Roaring Twenties, primarily through acquisition. By the end of 1926, the JCPenney sign hung on 747 buildings. In 1932, despite the Great Depression, the figure stood at 1,473. Now, with JCPenney's emphasis on large full line units, fewer new stores open per year, but our total space increases at an impressive rate: our nearly 1,700 JCPenney stores now total approximately 54 million square feet of net selling space.

The J.C. Penney Idea, adopted 1913

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 the men and women in our organization through participation in what the business produces.
To test our every policy, method and art in this wise: "Does it square with what is right and just?"

Story posted on Feb. 25, 2009 . . . Please report any broken links so we can update them
This article originally appeared in Issue 47 of our Subscribers-paid Journal online magazine

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