Golden Rule Merchant

James Cash Penney's first venture as a retail proprietor--a butchershop in Longmont, Colo.--opened in 1899 and failed almost immediately, after he refused to bribe an important local hotel chef with a weekly bottle of bourbon. "I lost everything I had," said Penney, "but I learned never to compromise."

Penney's unwavering faith in the copybook maxims of his youth roused skepticism in a mercenary age, but his credo underlay his success. At his death last week after a heart attack in Manhattan, Penney, 95, left a 1,660-store empire that he built without compromising the stiff principles he had absorbed from three generations of Baptist-preacher ancestors. He neither smoked nor drank, and for years demanded the same abstemious conduct from his employees. "I believe in adherence to the Golden Rule, faith in God and the country," he often said. "I would rather be known as a Christian than a merchant."

Penney grew up in poverty on a farm near Hamilton, Mo. He credited his father with "selecting my vocation" by arranging a job for him in a local dry-goods store. The pay: $2.27 a month. Later, Penney made his way to Wyoming, where the owners of another dry-goods firm were so impressed with his diligence that they sent him to the mining hamlet of Kemmerer to open a new shop--called The Golden Rule Store. In tiny Kemmerer, almost everybody bought on credit--and paid high prices. Penney, then 26, tried another formula: cash, but with a slender markup to attract big volume. He attributed his chain's success to that policy, and to the profit-sharing plan that he started in 1907, which he said made his employees "associates." With annual sales of $4.1 billion, J.C. Penney today ranks as the nation's fifth merchandising company. Penney's personal holding of its stock was worth $24 million.

Though the chain had been a moneymaker from the start, the Depression wiped out the first fortune of its founder and left him heavily in debt. Penney bounced back, borrowed on his life insurance, and resumed his duties as chairman of the board. He stepped down in 1958, the year that his company finally followed other retail chains by offering credit to its customers, but remained a board member. Until his final illness, he worked regularly at Penney's mid-Manhattan headquarters, where he kept five secretaries busy with volumes of correspondence.

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