The weekly times-record. (Valley City, N.D.) 1912-1922, 1916-08-24

his getting direct proportional bene.
fit, as in so many other cases, even
under many provisioning plans. The
general organization and the local
partner profit together, step by step.
THAT was one of the principles l
laid down at the very outset. Our lat
er progress has been in no little de-
gree due to the fact that we have been
successful in filling the higher posi-
lions with men suited to them. In
each case they have been men who
have served their apprenticeship in
the stores and know them thoroughly"
Nearly All Young Men
The men who are earning these
large incomes are virtually all young
men. Mr.. Penney himself has only
Just turned 40, and there are not more
than two or three older men in the or
ganization. Nearly all are westerners.
Only westerners, brought up in the
western retail business, are believed
to be generally capable of understand
ing western conditions and working
capably with western retail men.
The best recommendation any man
in the organization can give himself in
the eyes Of Mr.. Penney and his other
associates is to live modestly, save his
money and reinvest in the chain. The
founder of the business set the ex-
ample, and it has been followed by
practically every one in it. In ii years
there have been only six manager
partners who could not stand prosper
ity and had to be bought out and drop
ped.
There is such an intermixture of
sentiment and science in the personal
makeup of this founder who takes his
own medicine that it is little difficult
to know whether to set him down as
essentially a captain of commerce or
lucky dreamer. If we call him first
and foremost a business man, it might
be replied that there are men, even in
the clothing field and in chain, who
are probably making much more than
he is making on his investment-now.
But on the other hand Mr.. Penney was
a poor man IA years ago. And the
system which looked so wholly phil
anthropic in the beginning is only just
beginning to reach full commercial ef-
1ciency. Unlike most other chains, it
does not face prospect of diminishing
returns. It's difficulties do not multiply
with the number Of stores. 1t is not
preparing competition for itself by
training men and then forcing them
out 1t Is, in fact, an extraordinary
combination of the best features Of in
dividual and chain store proprietor
ship.
Let us, before we go on to the mer-
chandising details, have little more
light on this partnership arrangement
which lies at the root of the stores
success. Up to three years ago the
business was, as explained, not really
partnership at all, but a confederation
of partnerships united by Mr.. Penney's
personality and by advantages of CEN
tralized buying and the exchange of
ideas.
But by the end Of 1912 a need for
stronger organization was felt. There
were already "a stores and plans were
made to open IA more. The business
was therefore incorporated in Salt
Lake City. The capital was fixed at
$1,lOO,OO0, the 100000 being common
stock held by Mr.. Penney as trustee
and the balance being special classes
OF preferred stock, of which only $685.
700 has thus far been issued from time
to time to managers who become part. !
ners," and to whom Mr.. Penney in the
beginning lent the means to acquire
the interest. The surplus and undivid-
ed profits, it may be proper to say at
this point, now amount to nearly ST.
100000, or little more than half of |
the cash in stores and banks and the
in stock. Nearly all |
stores are rented and the value of the
fixtures Of the SO stores accounted for
amounts to less than $4,000, or an
average of $940 for each store, very
low figure.
The type of organization and opera.
ton was left unchanged by. incorpora.
ton: 1t continued as close a corpora
ton as it had been close a partnership,
with nobody financially interested
who was not active. 1t simply gave
the stores one name, a greater and
more comprehensive good will and a !
definite management.
Turn Small Stocks Six Times
The bearing of this is more plainly
seen in connection with the size of
the store stocks. The average retail
clothing store of the section of the
country in which the Penney stores
operate, the communities of from 1000
to 10000 people, an average of say s.
900 population, carry stock of about
$4,000 or $4,000, and do we'll if they
turn it twice a year. The Penney
stores invest from $4,000 to $4,000 or
an average of $4,000, carry a stock of
about double that and turn it on an
average nearly six times a year.
These rapid turns make it possible
to handle every new style that comes
in, and on the other hand the fresh
ness of the styles multiply the turns.
Style and staple bulletins are going
out from the New York office daily.
Naturally, with its large cash buying
power the company is g close and
shrewd bargainer.
When it comes to selling, the stores
number several advantages over the
ordinary independent. To the benefits
OF massed buying and frequent re-
newal and freshening of the stock by
rapid turns they add the policy of TAX
ing only small margin of profit and
selling for cash without delivery.
Against this policy what chance has
system of individual h11ving and sell.