Chapter 2: Kemmerer

All his life it was agony for James Cash Penney to address anyone familiarly ”including his beloved first wife, Berta. She was always "Mrs. Penney." Berta, however, always called her beloved husband "Jim" or "my Jim." This didn't mean, though, that she couldn't lace into him when angry . And the secret timidity, the lack of self-confidence she discovered in her new husband often made her furious. He was, she knew in her bones, far, far better than that.

The Self-Made Man

Berta Hess Penney pushed her husband toward rediscovery of himself. In later years when he was a larger-than-life heroic business figure, he would admit it. He would have been nothing without her. In Evanston, Wyoming, 1901, when they were living in one room with their infant son and Jim was working endless hours down the street at Johnson & Callahan's "Golden Rule" store, he would come home every night assailed with doubt. "I don't think I can do it," he would moan. "I'm afraid, Mrs. Penney." He would look at her beseechingly. "What am I? Just a clerk, that's all I am. That's all I've ever been, just a clerk."

"You owned a butcher shop!"

"And I failed!"

"Because you wouldn't pay bribes!"

"Because I'm stupid!"

"Because you're a moral man and I love you!"

Sometimes, at a point like this, Jim would start to cry. Or Berta would. Either way, they would end up in each other's arms holding on for dear life.

Guy Johnson and Tom Callahan had never seen a worker like Jim Penney, their new "first man" (assistant manager) in Evanston. They thought he was the best and most trustworthy young talent in their expanding small-town dry goods chain. Customers loved his energetic attention to detail, and he had the blood of a merchant in him. This was why he had received their coveted appointment to open the next Golden Rule store ”in Ogden, Utah.

The problem was that Jim Penney was secretly terrified of Ogden, a large and prospering town whose size meant running one of the biggest stores in the chain. And when he was afraid, which was often, Penney covered it with what appeared to be a steely resolve. To Johnson and Callahan, he behaved like a man possessed. The illusion succeeded because, as an outgoing human working machine with a quick mind, Penney had their respect. Thus, when he said, "No, I will not open a store in Ogden," they had to listen. "I want to get my sea legs in a smaller venue ." (Penney's vocabulary always amused the senior partners .)

"Such as?" Johnson asked.

"Kemmerer."

" Kemmerer? Are you sure?" "Yes."

"But there's hardly a thousand people in Kemmerer." "But enough to start."

"And it's a poor mining town." "Not that poor."

"With a company store to fight." "I am not afraid." (They believed this.)

"And growth? I heard it's peaked."

"No, no. Kemmerer will double, triple in size in the next few years."

"Well," said Johnson with disappointment, "I don't know, Jim. I'll have to talk to Tom about it."

"I trust he will understand. As I know you do, Mr. Johnson," said the seemingly cocky little man.

"You are our best man, Jim," Johnson said unhappily. "Thank you," Penney replied. And then he went home and cried to his wife.

The next year, 1902, they opened a small store in Kemmerer. It was only 25 by 45 feet, and the Penneys lived in the attic with packing crates as furniture. But the store was loaded with merchandise, "rough corduroys and sheepskin-lined coats piled high on the center tables, with men's furnishings to one side, ladies' and babies' things to the other," ^[1] and yard goods and shoes in back. The walls, shelves , and counters were also filled, and items such as notions and toys were tucked into corners (there were no cabinets or other fixtures because of the expense). Merchandise even hung from the ceiling. Guy Johnson, on his semiannual buying trip to the East, had bought well ”a Golden Rule specialty. Other differences in a Golden Rule store were the absence of haggling (a single, written price for all customers) and the outstanding values. Also, exemplary service. And no credit: Every transaction was cash-and-carry.

Because the coal mine only paid once a month and the company store gave credit and accepted company " coupons ," a cash business wasn't supposed to work in Kemmerer ( Johnson and Penney couldn't get a loan at the local bank, despite the Golden Rule chain's excellent reputation). But Penney's store had more goods of better quality, and the "one price for all" was always lower than anything one could haggle at the company store. So the miners and their wives saved and bought. Word also spread to ranchers and farmers and railroad workers. Customers kept walking in the door, with Penney opening the store at 7 a.m. and not closing before midnight ”during which time he seemed to be in perpetual motion, scurrying here and there making customers comfortable, making friends with them, explaining the quality goods, and making sales.

Still, every day Berta had to buck him up until he finally saw that he had succeeded and began to think he had done it all himself. This actually charmed his loving wife, who not only cooked , kept "house" in the attic, did the laundry by hand (hauling up water by rope and pulley), and did the mending, but also parked the baby's basket under a store counter and waited on customers for several hours a day.

At the end of their first year, "$28,898 of merchandise had been sold. Profits, to be divided three ways, were an impressive $8,514. Penney had succeeded in turning over his original inventory almost four times ." ^[2] Johnson, Callahan, and Penney each had a third interest in the store, which was standard in the Golden Rule formula. Capitalization, mostly for inventory, had been $6,000, also split into thirds . ^[3] With the partners expensing his modest salary, after one year Penney was able to pay off his loan and deposit some $800 in the Kemmerer bank, making him one of its largest depositors. He was 26 years old.

^[1] Mary Elizabeth Curry, Creating an American Institution: The Merchandising Genius of J.C. Penney (New York: Garland Publishing, 1993), p. 96.

^[2] Ibid., p. 97.

^[3] Penney's funds came from new savings and a loan from his Missouri hometown bank (at a better rate than offered by Johnson and Callahan!).