(Contributed by Clair A. McElhinny, retired vice president of sales, G.C. Murphy Co.)

When the late George C. Murphy opened his first "Five and Dime" store in McKeesport, Pennsylvania, in 1906, little did he realize that he was sowing the seed for the large, well organized merchandising institution it is today. By 1911, there were 12 Murphy stores, in towns surrounding the headquarters in McKeesport. In that same year, John S. Mack and Walter C. Shaw purchased controlling interest in the Company. Mr. Mack was elected President and Chairman of the Board of Directors of the new company and held that position until his death in 1940.

Mr. Mack and Mr. Shaw represented an ideal team to lead the young company on to record-breaking achievement. Both men had original and concurring ideas about the variety store business, and management and both were equipped with plenty of experience in the work. Mr. Mack had risen from floorman to general manager in the Five and Dime business in Johnstown, Pennsylvania, and Mr. Shaw, a fellow employee, was equally well versed in knowledge of the business. Mr. Mack has often been referred to as the "visionary" or "planner" for he originated many of the ideas which became the successful, basic policies of the Company that have been maintained over the years.

Mr. Mack's theories of variety store management were revolutionary in their day. He could see no reason for the so-called "dime store" to be limited in its service to customers by confining its merchandise to those items retailing at no more than ten cents. He believed that customers who came in to buy five and ten-cent items would be equally as interested in articles costing somewhat more and it was he who introduced 25-cent merchandise into the stores. Today, Murphy stores realize a large volume of business in merchandise retailing at $1.00 and over, proving Mr. Mack's theory correct.

Instead of joining the race to open new stores, the Company launched upon a policy of vertical expansion; that is, extending all existing locations and furthering development of present stores to realize maximum volume. This was one of the policies that permitted the Company to grow and prosper during several bad economic periods in our country's history. Mr. Mack and Mr. Shaw believed implicitly that the element of personal initiative should be developed to its fullest extent in every employee. They took exception to the popular concept of rigid control from the Home Office, believing that the Company would benefit if managers were permitted to exercise their own initiative in the daily operation of stores under their supervision.

Under the leadership of Mr. Mack and Mr. Shaw, the Murphy Company progressed steadily through the years, adding to the number of stores and increasing the sales volume. After 1911, the Company showed a loss of sales over the preceding year on but two occasions, and in one of those years, the loss was less than 1 percent. With these two exceptions, the Company has not shown less than a 6 percent sales increase in every year since 1911. During 1912, which was the first full year the stores were under the Mack-Shaw direction, a sales increase of 47.2 percent was realized.

In the first year of the Mack-Shaw management, six new stores were added, five the following year, and six more in 1914. Around 1927 and 1928, stores were added at a more rapid pace and twenty were added each year between 1927 and 1929, bringing the total number up to 153 stores at the close of that year. After that, the expansion slowed down to an average of three to five stores a year, and, from 1941 to 1944, no new stores were opened, and only one in 1946.

In addition to its pioneering managerial policies, the Murphy Company has instituted many other developments in the variety store field. Murphy stores were the first to carry a complete line of electrical supplies. Women's Apparel and style merchandise were also shown in Murphy stores years before such items were handled by other variety chains. Even in the early days, the services of style and apparel specialists were secured to help develop these new departments to their fullest extent. In recent years, the Company has spent vast sums of money in perfecting merchandise and advertising techniques to promote maximum sales. The Murphy past is indeed one of pioneering.

Murphy stores are located in 12 states and the District of Columbia, the greatest number of which are located in four states: 103 in Pennsylvania, 31 in West Virginia, 17 in Ohio and 16 in Maryland. This concentration of stores within a relatively small geographical area was a definite plan of management which believed that a closely knit pattern would foster more efficient administration and a more economical distribution of merchandise. They strove to bring the advantages of large store operations to smaller communities. By 1925 some of the earlier stores began to evidence need of repairs and modernization, and it was at that time that an improvement program, which is still being followed, was begun.

The General Offices of the Company are still located at its birthplace in McKeesport, Pennsylvania. These offices house the Executive, Buying, Merchandising, Sales, Personnel, Payroll, Bookkeeping, Auditing and Sales Promotion Departments and employ in the neighborhood of 400 persons. A Printing Department, Sign Shop and a modern Display Department are located in a nearby building.

The Murphy Company is one the few companies of its type to operate a modern warehouse from which merchandise is shipped to all stores. It, too, is located in McKeesport, Pennsylvania, on the main line of the B. & O. Railroad and the banks of the Youghiogheny River. It contains 302,000 sq. ft. of floor space. In 1947, approximately fifty million dollars' worth of merchandise, at sales value, passed through its doors en route to stores.

In 1926, a Buying Office was opened in New York City. This office now occupies an entire floor of the building located at 212 Fifth Avenue. Five of the twenty-three buyers are located permanently in the New York Office, while the others are located in McKeesport and make frequent trips to New York and other noted markets, in their search for merchandise.

A Style Center was opened in New York City in 1940. Located at 275 Seventh Avenue, in the heart of the world's leading garment district, it provides better service to stores in the procurement and delivery of women's apparel.

The G.C. Murphy Company presently employs regularly more than 15,000 men and women, expanding the operating forces to a total of over 23,000 during peak seasons; and the annual payroll reaches well over fourteen million dollars. This is quite a contrast as compared with the first store opened in 1906 with five employees. The G.C. Murphy Company strives at all times to create a spirit of cooperation and service among employees and between employees and customers. Along with this spirit of cooperation, plans were made for progressive employee relations and liberal benefits to all. Great progress has been made in recent years in working out these privileges and emoluments, brought about by an earnest endeavor to lead in the provision of every type of advantage for co-workers.

A liberal vacation policy is provided for all regular employees, even those working as little as twenty hours per week. Employees having a service record of less than one year, receive a paid vacation of one week; those with more than one year's service receive a paid vacation of two weeks. After five years of service, three weeks comprise the vacation period; and, from fifteen to twenty-five years of service, a full month's vacation period is granted. After twenty-five years' service, and there are many in this group, a total of five weeks' vacation is granted out of each year. A Veterans Club, comprising those employees with a service record of more than fifteen years, now has a large membership. Additional privileges and emoluments are enjoyed by veterans, people who have rendered loyal and faithful service for so many years. A Christmas Bonus Plan is in effect and the amounts received by each employee depend upon the length of service. A salary increment system, which insures review at regular intervals, brings periodic salary increases to all employees whose work is satisfactory. A Sick Relief Plan is also maintained, paying up to 65 percent of salaries in the event of illness, after the first week, at no cost to employees. Group Insurance is provided by the Company without cost to all employees; and, in 1944 a Retirement Plan was inaugurated.

The Company strives to place in key positions those employees who have come up through the ranks and who have a thorough knowledge of the business. Practically all of the Buyers and Home Office key executives are men who started with the Company in humble stockroom positions, advancing through the years to Assistant Managers, Store Managers, Field Representatives and finally to the Executive Offices. Young men who desire store management positions are given the advantages of an Executive Training School covering a two-year course.

Murphy salesgirls are recognized by the Company as the real "front" of the business. It is they who form the direct customer-contact; and, for their benefit, weekly sales schools are conducted in all stores with complete instructions emanating from the Home Office Personnel Department.

Salesgirls are given special attention and taught the importance of a friendly attitude in customer contacts. It is the desire of the Company that each Murphy store be operated as an institution of service to the community in which it stands and that the "Spirit of Service" dominate all its policies.

From the humble beginning of one store in 1906, the G.C. Murphy Company has grown into a large merchandising and service institution, still carrying on those same ideals which brought success through a past of pioneering.

(Contributed by Clair A. McElhinny, retired vice president of sales, G.C. Murphy Co.)