A brief look at American Express

Visa, MasterCard and Discover are children compared to one of the oldest companies here in the United States. True as a merchant you may not accept it but it is an important part of our history and it is a survivor.

The American Express Company was originally founded as an express mail service in Buffalo, New York by Henry Wells, William Fargo and John Butterfield in 1850. Wells and Fargo left the company in 1852 when Butterfield opposed expanding operations to the new state of California. Butterfield then moved the headquarters to Manhattan, calling several buildings home over the course of time. (As an unrelated side note Butterfield’s son Dan would become a major general in the Union army during the Civil War and became enamored with writing bugle calls. His most famous was known as Butterfield’s Lullaby then and as Taps today.) The eagle, which has been a part of their logo first appeared on one of the buildings they used as a warehouse on Trinity Place (it’s still there). In 1914 they took up residence at 65 Broadway in what became known as Express Row.

American Express was active in shipping using railroads and steamships to ship goods all over the country. In 1882 they got into the financial business by issuing money orders becoming the first competitor of the US Postal Service. In the late 1880s the company’s president J.C. Fargo took a trip to Europe and despite bearing a letter stating who he was and carrying letters of credit he found that outside of major cities they were of no use. Upon his return he asked American Express employee Marcellus Berry to come up with a solution and the first traveler’s cheques were born.

Becoming an international presence, they were one of the few financial institutions to assist stranded American citizens in Europe when World War I broke out in 1914 and they were appointed by the British government to deliver packages to their POWs. While their reputation as a financial institution grew during the war, their domestic package delivery service took a big hit. In 1917 President Woodrow Wilson nationalized the railroads in order to move troops and supplies more efficiently. As a result all previous contracts were declared null and void and all existing express companies were to be merged into one company to simplify transportation and logistics. All equipment and property was to be turned over to the government. Of all of the property that was nationalized 40% of it came from American Express.

The financial arm of the company now took over. Following World War II credit cards began to become popular. In 1957 CEO Ralph Reed decided to launch a credit card and were the first to issue plastic, embossed cards in 1959. While intending to be a premium card, the clientele was further segregated in 1966 with a Gold Card and in 1984 with the Platinum Card, a first in the industry and there have been more introduced since. Each card carried an annual fee (originally $6 per year). In an attempt to corner the market they offered to cut merchant fees if a merchant only accepted American Express. Visa and MasterCard cried foul and many merchants in some cases stopped accepting American Express cards altogether as the fees were too high. There was one holdout, Neiman-Marcus, which only began accepting other cards in 2011.

Besides credit cards the company was also involved in investment banking, growing at one point to become the second largest firm in the U.S. In 1993 the CEO decided to get out of the business and their interests were sold or spun off. One spin off became Lehman Brothers. Most of the rest was sold to Primerica where it became Smith Barney. They were also involved in the communications business, helping to create MTV, Nickelodeon and The Movie Channel and sold their holdings to Viacom in 1984. The company also is involved in business travel agencies, financial advisors and publishing.

Along with the eagle logo, the company has used the picture of a Roman Centurion on its cards since 1958. The shade of green used is designed to be similar in appearance to U.S. currency. They are best known for their traveler cheque slogan “Don’t leave home without them” since the cards were not accepted everywhere in the world. They still aren’t.

Corporate headquarters remain in New York City and for a long time occupied 3 World Financial Center. The terrorist attacks on September 11 damaged the building forcing AmEx into a temporary home for nearly a year. Other offices are in Fort Lauderdale, Florida, Salt Lake City, Utah and Phoenix, Arizona with its data center somewhere in North Carolina. A Canadian branch is located in Markham, Ontario with other foreign offices in the UK and Hong Kong. It has been continuously rated one of the best companies to work for in the US and Canada and is listed in Forbes Magazine as one of the most admired companies in the world.