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                                                                    EXHIBIT 4(m)

                                   GUARANTY
                                   --------


                         This Guaranty Agreement is executed as of this 3rd day
                    of December, 1996, by J. C. Penney Company, Inc., a Delaware
                    corporation ("Guarantor"), in favor of J. C. Penney Funding
                    Corporation, a Delaware corporation ("Funding"), and the
                    Lenders (" ") (as defined below).


                                   RECITALS:
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     WHEREAS, Funding is a wholly-owned subsidiary of Guarantor;

     WHEREAS, Funding and Guarantor have entered into those certain 364-Day and
Five-Year Revolving Credit Agreements (collectively, the "Agreements") each
dated as of December 16, 1993,  as amended and restated with new Lenders as of
December 7, 1994, as amended as of December 6, 1995, as amended and restated as
of December 3, 1996 and as further amended, modified, extended or restated from
time to time with the written consent of the Guarantor, (the "Restated
Agreements"), among Guarantor, Funding, Morgan Guaranty Trust Company of New
York, as agent for the Lenders, Bank of America Illinois, Bankers Trust Company,
The Chase Manhattan Bank, Citibank, N.A., Credit Suisse and Nationsbank of
Texas, N.A., as co-agents for the Lenders, and certain other financial
institutions named in the Restated Agreements (collectively, the "Lenders") in
amounts not to exceed One Billion Five Hundred Million Dollars ($1,500,000,000)
and One Billion Five Hundred Million Dollars ($1,500,000,000), respectively; and

     WHEREAS, Guarantor is willing to guarantee any borrowings of Funding under
the Restated Agreements on the terms set forth herein.
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     NOW, THEREFORE, in consideration of the premises, Guarantor hereby agrees
as follows:

     1.  Subject to the terms and conditions of subordination set forth in this
Guaranty, Guarantor hereby unconditionally guarantees in favor of the Lenders,
the prompt payment when due of all interest, principal, and other amounts owing
under the Restated Agreements (collectively, the "Guaranteed Debt").  This is an
unconditional guaranty of payment, and in the event of default by Funding in the
payment of interest, principal, or any other amounts payable under the
Guaranteed Debt, the Lenders may proceed directly against Guarantor to enforce
this Guaranty (including by the institution of legal proceedings) without first
proceeding against Funding.

     2.  Guarantor acknowledges that it has received and will receive a direct
or indirect benefit from the making of this Guaranty and the creation of the
Guaranteed Debt.

     3.  a. The Guaranteed Debt shall be subordinated and subject in right of
payment to the prior payment in full of any and all other indebtedness for
borrowed money incurred, created, assumed, or otherwise guaranteed by Guarantor
(collectively referred to as the Guarantor's "Senior Debt").

         b. In the event of (1) any dissolution or winding-up or total or
partial liquidation or reorganization of Guarantor, whether voluntary or
involuntary, or any bankruptcy, insolvency, receivership, or similar proceeding
relative to Guarantor, or (2) any default in the payment of principal (including
any acceleration or required prepayments or amortization) of or interest on any
Senior Debt of Guarantor, then, subject to the provisions of subsection d.
below, the Lenders shall not be entitled to receive any

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payment under this Guaranty on account of the Guaranteed Debt unless and until
all Senior Debt shall have been paid in full or otherwise discharged.

         c. For purposes of determining the priority of payments between the
Senior Debt and the Guaranteed Debt, in the event that the Guaranteed Debt, or
any part thereof, is declared due and payable prior to its stated maturity, all
principal of and interest and any other amounts due on all Senior Debt
outstanding at the time of such declaration as to the Guaranteed Debt shall
first have been paid in full, before any payment is made by Guarantor upon the
Guaranteed Debt.

         d. In no event shall any Lender be required by this subordination to
refund any amounts paid to it pursuant to this Guaranty on account of the
Guaranteed Debt prior to the events specified in subsections b. and c. above,
and prior to such events the Lenders shall be entitled to be paid hereunder as
agreed and to collect any sums due such Lenders hereunder by any lawful means.

         e. The provisions of this Section are for the purpose of defining the
relative rights of the holders of any Senior Debt, on the one hand, and the
Lenders, on the other hand, against Guarantor, and nothing herein shall impair,
as between the Guarantor and the Lenders, the obligation of Guarantor, which is
unconditional and absolute, to guarantee the prompt payment when due of the
Guaranteed Debt in accordance with the terms and provisions thereof; nor shall
anything herein prevent the Lenders from exercising all remedies otherwise
permitted by applicable law upon default hereunder, subject to the rights, if
any, under this Section of any Senior Debt holder.

     4.  The substantive laws of the State of New York shall govern the
validity, construction, enforcement, and interpretation of this Guaranty.

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     IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as
of the date first written above.
     
                               J. C. PENNEY COMPANY, INC.,
                               a Delaware corporation, as Guarantor,

                               By:  /s/ Robert B. Cavanaugh
                                  ---------------------------------------
                                       Name: Robert B. Cavanaugh
                                       Title:  Vice President & Treasurer

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