Are you afraid that some day you may go broke? At 56, this happened to J.C. Penney who lost his vast fortune and his ownership in the store chain that bears his name.
What happened to Penney offers us a valuable lesson and we’ll see if he recovered his fortune.
James Cash Penney was born in 1875 in Missouri to a struggling farmer/self-made Baptist minister father and a devout Christian mother. They raised him to believe in God, to conduct himself with integrity and to practice the Golden Rule.
They also raised Penney to be self-reliant and his father taught him the value of money by having him start working at the age of 8 to pay for his shoes and clothing.
Penney was just an ordinary student and after graduating from high school, he became a store clerk. For health reasons, Penney moved to the dry climate of Denver and became a store clerk there but a common store pricing practice of the time deeply offended him.
Unlike today where stores display their prices, at that time many did not. Instead shoppers had to ask for the prices which let salespeople size them up and set prices as high as they thought each shopper would pay.
Penney thought this was unethical and didn’t want any part of it. When a butcher shop came up for sale in Longmont 35 miles away, he quit his job and used all his savings to buy that shop. His butcher shop thrived until one day the buyer at his biggest client demanded a bottle of whiskey as a weekly bribe.
This upset Penney because it violated his ethics. He hesitantly paid the bribe once and refused to pay it again. He lost that account and with it, his business failed and he lost all his money.
Desperately needing a job, Penney went to work for two men who owned dry-good stores called ironically the Golden Rule. They posted their prices, treated customers with respect and Penney was pleased to join them.
Penney enjoyed being with customers and gradually overcame his shyness, as he became a top salesperson. Four years later in 1902, when the Golden Rule decided to open a store in a tough little Wyoming mining town of 1,000 residents with 14 saloons and 23 brothels, they sent him.
What happened next changed Penney’s life and became the key to his success.
To motivate him, they made him a 1/3 partner in that store. Having a sense of ownership, Penney became determined to succeed. So that he could concentrate on the business, he and his wife and their baby lived in the basement of the store. They used merchandise crates for furniture.
He worked 7a.m. to midnight six days a week and one hour less on Sundays. By offering quality merchandise at bargain prices, his store became a big success and he decided to open more stores. Knowing how powerful a motivator being an owner can be, each time he opened a new store, he made his best employee a 1/3 partner in that store.
Now he was on a roll. In 1907, Penney bought out his two original Golden Rule partners and by 1912 he was the majority owner of 34 stores. A year later he changed their name to J.C. Penney Company, Inc. and rapidly grew the chain, as he became enormously successful.
By 1929, J.C. Penney had nearly 1,400 stores nationwide and his name was well known across America. On October 23, he proudly took his company public on the New York Stock Exchange and basked in his success.
But six days later the stock market crashed.
Penney’s ownership in the company had been worth $40 million but he’d pledged most of it in real estate, banking, dairy and other ventures. As the economy collapsed, it took everything he owned with it and he was forced to sell his J.C. Penney Co. shares to pay his debts.
The J.C. Penney Co. prospered but Penney no longer had ownership and he was broke. Deeply depressed and close to a nervous breakdown, in December, 1931 he checked into the Kellogg Sanitarium in Battle Creek, Michigan.
Thinking his life was over; Penney awoke at dawn one morning and as he aimlessly wandered the hallways he heard the hymn, “God Will Take Care of You.” As he listened, he was profoundly moved and followed the beautiful sound into the chapel. It became a religious reawakening as he felt God had reached out to him. (A&E Biography, air date 6/30/05)
This “Miracle” brought him back to life. At the age of 56, Penney returned to the J.C. Penney Co. and the firm paid him his first salary in 23 years. He used part of that salary, loans from three of his friends and cashed in his life insurance policy to buy stock in the company.
The company continued to prosper and by the end of the 1930’s, though he no longer had a vast fortune, Penney became financially secure again. He never again headed the firm but remained the company patriarch and inspirational leader for the rest of his 95 years.
Success Tip of the Week: As J.C. Penney showed us, that we are financially successful at a point in time doesn’t guarantee that we will always be and if we do lose what we own, life can offer us a variety of new possibilities if we’re open to them. The key is not to give-up.
In the next KazanToday, The homeless “falling down drunk” who rose from the gutters of skid row to help thousands of people worldwide to turn their lives around as he had done.