American Express: The Unofficial History of the People Who Built the Great Financial Empire

Nearly every business book in existence claims to have found the secret recipe to enduring success. They do so by examining selected groups of companies of (usually) short time horizons. In contrast, this book follows a radically different approach and comes to a radically different, and more honest, conclusion.Delving into the long history of American Express, the author finds that there is no single management system, leadership style, or culture that is optimal in the long-term. Perhaps the only constant in American Express’s history is its commitment to the external perception of trust, security, and convenience. Rather, enduring success comes from a combination of historical accident (external luck), doing more right things than wrong (internal luck), and, most importantly, strong willed individuals at all levels of the organization who drove innovation and change.I found the book to be an extremely compelling read both for its narrative and for its depth of research. I kept wonder how the author pieced information together – especially when writing in the pre-Internet era about events spanning over 100 years.According to the book, here is AmEx’s history in a nutshell:1850: After a rate war, American Express was created by combining three express services (Wells & Co., Butterfield, Wasson & Co., and Livingston, Fargo & Co.) into an unincorporated joint stock corporation with a maximum lifespan of 10 years. While John Butterfield and William George Fargo held the most stock, Henry Wells was named President in order to ensure a balance of power. Since the owners had unlimited liability, they were extremely risk-averse and operated with a highly contentious Board of Directors.1867: After another rate war, American Express merged with Merchants Union Express into a new joint-stock association, this one with a lifespan of 35 years. W.G. Fargo took control and placed relatives into many key positions of power.1881: J.C. Fargo assumed control after his older brother’s (W.G. Fargo’s) death. At the urging of Marcellus Fleming Berry (a traffic manager in the New York headquarters), J.C. approved the creation of a money order service – partly as retaliation to the Postal Service’s encroachment into the express business.1890: J.C. Fargo created the Travels Cheque after struggling to redeem his letter of credit during a trip to Europe sometime between 1888 and 1890. Unlike the express service and the money order, this was the first original product idea created by American Express.1896: C.O. Smith, a money-order manager, proposed that AmEx be “prepared to book tourists for any tour they desire to take in the United States or Europe” as a means of benefitting from and driving the Travelers Cheque business. While J.C. Fargo resisted the idea, William Swift Dalliba defied his boss (head of European operations) embraced it. (The travel business itself was never profitable, but it served as an accelerator for financial products and services. In addition, profits from TCs came mainly from the profit from the float rather than sales fees.)1914: (a) George Chadbourne Taylor took over as President at a time when AmEx was losing money due to regulatory pressure, labor strife, and competitive pressure. (b) Taylor would go on to end the company’s ban on women employee and to purge the ranks of inept leaders – including many Fargos - granted their roles through nepotism and influence. Taylor named Howard K. Brooks as the Vice President in charge of financial affairs. Brooks “envisioned a colossal international operation offering a full range of [interlocking] shipping, foreign trade, and tourist services. (c) During the same year, when World War I broke out and European banks closed, AmEx not only kept operating but also worked to arrange passage and send telegrams and letters for stranded Americans.1915: Taylor upgraded the publicity bureau originally created by J.C. Fargo into a “full-scale advertising department.”1918: The United States government forced all express companies out of the domestic express business. AmEx contributed its related assets (excluding its headquarters and it financial surplus) to the American Railway Express albeit with Taylor as President. This not only freed AmEx of a struggling business, it expanded the network of offices that sold Travelers Cheques and Money Orders.1923: Frederick P. Small took over as President and (shortsightedly) attempted to expand Amex’s focus on travel and reduce its focus on financial services.1929: Amex was acquired by Chase Bank with Albert Wiggin as Chairman just prior to the October market crash that began the Great Depression.1934: Chase spun out a set of assets and liabilities, including American Express still headed by F.P. Small, into a new company called Amerex Holding Company with Wiggin as Chairman.1944: Ralph Thomas Reed (a tyrant, an autocrat, and a micro-manager) succeeded F.P. Small as President. He worked to successfully resurrected the company’s banking business in Europe to take advantage of an expected post-war boom in travel. Reed fostered the image of AmEx as a travel, freight forwarding, and field warehousing business despite knowing full well that all profits came from the Investment Department. Reed generally discouraged strategic planning and innovation and valued loyalty above all else.1958: Reed, after resisting the idea for a decade, launched the American Express Credit Card. (It was highly unprofitably until1962 when George W. Waters, a retail and grocery chain COO hired the previous year, took over the business and turned it around.)1960: Howard L. Clark succeeded Reed as President. Clark brought modern management practices to the company, including: technology, business analysis including accurate accounting, “funcationalization,” and mass-market advertising. However, he “never defined American Express, never developed a strategic plan, and in the end, never launched a major takeover.”1963: Amex nearly went out of business due to a massive fraud involving one of its field warehousing customers. Amex reassured bankers that is would meet both its financial and moral obligations.1968: Amex acquired U.S. Camera magazine, later renamed Travel & Leisure. Amex also acquired Fireman’s Fund insurance company.1975: Ogilvy & Mather launched the “Don’t Leave Home Without It” advertising campaign for Amex.1977: James D. Robinson III succeeded Howard L. Clark as President.1981: Amex acquired Shearson Loab Roades.1983: Amex’s thirty five year earnings growth record ended when its property and casualty insurance subsidiary, Fireman’s Fund, posted a significant loss.1984: Amex acquired Lehman Brothers. (Amex did not fully divest Lehman Brothers until a 1994 public offering, well before the company’s 2008 collapse.)1987: Amex decided to sell 13 percent of Shearson Lehman Brothers to Nippon Life.

Well researched and well written. Actually a very interesting story of a powerful American company and it's fortunes and founders.

This book is a very dated view of the company. As a recent recruit (in 2012), I was looking for information about the company I'd just joined. In fact, the narrative is focused on the Amex of the 1980's. Not what I was hoping for.For historical record, it is packed with facts and anecdotes.

The content is great. I bought it for my daughter. She likes the content very much. But the paper quality is bad, she likes to write some different opinion on the paper, but the paper easy broken