On this day in economic and business history …
James Cash Penney opened his first store, one of a chain known as “the Golden Rule,” in Kemmerer, Wyo., on April 13, 1902. Penney originally operated the store in partnership with two other entrepreneurs, but Penney proved the more dedicated of the three partners, and within five years the others had sold their interests and Penney was in sole control of three Golden Rule stores. Within a decade, there were nearly three dozen stores scattered across the Rocky Mountain states, and it was time for a new name for the business: J.C. Penney Company, Inc. (NYSE:JCP), named after the man who built it.
J.C. Penney Company, Inc. (NYSE:JCP) grew rapidly throughout the western half of the United States (NYSE:X) and had more than 1,400 stores in 1929, just before the stock market meltdown. Unfortunately for James Penney, the crash of 1929 destroyed much of his wealth, and the economic effect of the Great Depression was such that he had to borrow against life insurance policies just to meet J.C. Penney Company, Inc. (NYSE:JCP)’s payroll. Penney (the man and the company) survived the Depression and grew again, but it took a toll on the health of both. James Cash Penney wound up checking into the Battle Creek Sanitarium — the birthplace of Kellogg Company (NYSE:K), where the highly religious Dr. John Harvey Kellogg Company (NYSE:K) attempted to cure his patients with boring food — to recover from the stress of nearly losing everything. That was the end of his corporate leadership, but James Penney remained chairman of the board until after World War II and would serve as an honorary chairman until his death in 1971.
J.C. Penney Company, Inc. (NYSE:JCP) is also notable, beyond its leading role in American retail, for its formative imprint on Sam Walton. The Wal-Mart Stores, Inc. (NYSE:WMT) founder’s first job following his college graduation was as a management trainee in an Iowa J.C. Penney store. Penney’s focus on maximizing the value of customers’ visits and their purchases remain clear in Wal-Mart’s corporate focus to this day. By the time Walton opened his first Wal-Mart Stores, Inc. (NYSE:WMT) in 1962, J.C. Penney Company, Inc. (NYSE:JCP) was already truly national — it had opened a store in Alaska that year, and its first Hawaiian location would open four years later. A decade later, J.C. Penney Company, Inc. (NYSE:JCP) had more than 2,000 stores across the country. This was “Peak Penney,” and the company has never been quite as large, or quite as important to the American economy, since.
The roots of American insurance
A number of prominent Philadelphia citizens and businessmen came together on April 13, 1752, to form the Philadelphia Contributionship, the first property insurance company in the United States. As with many other important developments in early American history, this one owed its genesis to Benjamin Franklin, who had founded Philadelphia’s first volunteer fire brigade in 1736 and saw a clear benefit to insuring the properties that might eventually catch fire.
Originally named “The Philadelphia Contributionship for the Insurance of Houses From Loss by Fire,” the company retained its focus on fire insurance until the early 1800s, when it switched to using a perpetual policy that would remain in effect permanently until canceled. The Contributionship still exists today, and you can still buy insurance from it, but it’s now only one tiny thread in a far larger tapestry. In 2009, the U.S. Census recorded some $423 billion in property insurance premiums underwritten, which includes roughly $170 billion in automobile insurance and about $58 billion in homeowners’ insurance. The property-insurance industry generated more than $36 billion in operating profits in 2009 from those policies.