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The story
Founded by Henry Wells, John Warren Butterfield and William Fargo in 1850, in Buffalo.1
Early history
In 1850, American Express was started as a freight forwarding company in Buffalo, New York. It was founded as a joint-stock corporation by the merger of the express delivery companies owned by Henry Wells (Wells & Company), William G. Fargo (Livingston, Fargo & Company), and John Warren Butterfield (Butterfield, Wasson & Company). Wells and Fargo also started Wells Fargo & Co. in 1852 when Butterfield and other directors objected to the proposal that American Express extend its operations to California.
American Express buildings 1850 to 1986
Founded in Buffalo in 1850, American Express opened its first headquarters in New York City at 10 Wall Street, where its predecessor Wells & Company had been located. The company moved to 62 Broadway in 1853. In 1854, it purchased a lot on Vesey Street to site horse stables for its horse-drawn wagons.
American Express built its first company-owned headquarters at the intersection of Jay Street and Hudson Street, which opened in 1858. It was a marble Italianate palazzo at 55–61 Hudson Street, which had a busy freight depot on the ground story with a spur line from the Hudson River Railroad. A stable was constructed in 1867, five blocks north at 4–8 Hubert Street; in 1898 architect Edward H. Kendall was hired to extend the stables, and he added the American Express bulldog/watchdog logo in terracotta relief on both the Laight and Hubert Street facades of the expanded building.
The company prospered sufficiently that headquarters were moved in 1874 from the wholesale shipping district to the budding Financial District and into rented offices in two five-story brownstone commercial buildings at 63 and 65 Broadway that were owned by the Harmony family. In 1880, American Express built a new warehouse behind the Broadway Building at 46 Trinity Place. The designer is unknown, but it has a façade of brick arches that are reminiscent of pre-skyscraper New York. American Express has long been out of this building, but it still bears a terracotta seal with the American Express bulldog logo. By 1903, the company had assets of some $28 million, second only to the National City Bank of New York among financial institutions in the city. To reflect this, the company purchased the Broadway buildings and site.
Following the retirement of William Fargo's brother J. C. Fargo (1829–1915) in 1914, an aggressive new president, George Chadbourne Taylor (1868–1923) was elected. He had worked his way up through the company over the previous 30 years, and decided to build a new headquarters. The old buildings, dubbed by The New York Times as "among the ancient landmarks" of lower Broadway, had become inadequate for such a rapidly expanding concern. After some delays due to the First World War, the 21-story neo-classical American Express Co. Building was constructed in 1916–17 to the design of J. Lawrence Aspinwall, of the firm of Renwick, Aspinwall & Tucker, the successor to the architectural practice of James Renwick Jr. The building consolidated the two lots of the former buildings with a single address: 65 Broadway. This building was part of the "Express Row" section of lower Broadway at the time. The building completed the continuous masonry wall of its block-front and assisted in transforming Broadway into the "canyon" of neo-classical masonry office towers familiar to this day. After moving to newly purchased international headquarters at 2 New York Plaza in 1975, where it remained until 1986, American Express sold 65 Broadway to the American Bureau of Shipping in 1977, while still retaining travel services on the ground floor of that building.
National expansion 1874–1918
For approximately two decades from its founding in 1850, American Express enjoyed a virtual monopoly on the express transport of goods, currency, and securities throughout New York State.
Following its move to larger headquarters at 63 and 65 Broadway in 1874, the company extended its reach nationwide by arranging affiliations with other express companies such as Wells Fargo, railroads, and steamship companies. In 1882, American Express started its expansion in the area of financial services by launching a money order business. Sometime between 1888 and 1890, J. C. Fargo took a trip to Europe and returned frustrated and infuriated. Despite the fact that he was president of American Express and that he carried with him traditional letters of credit, he found it difficult to obtain cash anywhere except in major cities. Fargo went to Marcellus Flemming Berry and asked him to create a better solution than the letter of credit. Berry introduced the American Express Travelers Cheque which was launched in 1891 in denominations of $10, $20, $50, and $100.
American Express Travelers Cheques established the company as a truly international institution. In 1914, at the onset of World War I, American Express was among the few companies to honor the letters of credit, traveller's cheques, and money orders held by Americans stranded in Europe. The British government appointed American Express as its official agent at the beginning of World War I. The company delivered letters, money, and relief parcels to British prisoners of war. Its employees went into camps to cash drafts for both British and French prisoners and arranged for them to receive money from home. By the end of the war American Express was delivering 150 tons of parcels per day to prisoners in six countries.
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In 1915, American Express established a travel division and soon established its first travel agency.
End of railroad express business in 1918
American Express was one of the monopolies that President Theodore Roosevelt had the Interstate Commerce Commission (ICC) investigate during his administration (1901–1909). The interest of the ICC was drawn to its strict control of the railroad express business. However, the solution did not come immediately to hand. The solution to this problem came as a coincidence to other problems during World War I. During the winter of 1917, the United States suffered a severe coal shortage and on December 26 President Woodrow Wilson commandeered the railroads on behalf of the United States government to move federal troops, their supplies, and coal. Treasury Secretary William Gibbs McAdoo was assigned the task of consolidating the railway lines for the war effort. All contracts between express companies and railroads were nullified and McAdoo proposed that all existing express companies be consolidated into a single company to serve the country's needs. This ended American Express's express business and removed them from the ICC's interest. The result was that a new company called the American Railway Express Company formed in July 1918. The new entity took custody of all the pooled equipment and property of existing express companies (the largest share of which, 40%, came from American Express, who had owned the rights to the express business over 71,280 miles (114,710 km) of railroad lines, and had 10,000 offices, with over 30,000 employees.
1920s–1970s
American Express executives discussed the possibility of launching a travel charge card as early as 1946, but it was not until Diners Club launched a card in March 1950, that American Express began to seriously consider the possibility. At the end of 1957, under American Express CEO Ralph Reed the company entered the business and by the launch date of October 1, 1958, public interest had become so significant that 250,000 cards were issued prior to the official launch date. The card was launched with an annual fee of $6, $1 higher than Diners Club, to be seen as a premium product. The first cards were made of paper, with the account number and card member's name typed. In 1959, American Express became the first major issuer to introduce embossed plastic cards.
In 1960, Howard L. Clark became president and CEO of the company.
In 1966, American Express introduced the Gold Card for "big-spending members".
In 1977, James D. Robinson III became chairman and CEO of the company.
In 1979, American Express acquired 50% of the cable subsidiary of Warner Communications, forming Warner-Amex Satellite Entertainment, for $175 million in cash and short-term notes. It owned two-thirds of Qube, an experimental two-way cable TV service, along with MTV, Nickelodeon, and The Movie Channel. The venture was unprofitable, and, in 1985, Amex sold its 50% interest back to Warner Communications for $450 million.
1980s
In the 1980s, American Express embarked on an effort to become a financial services holding company and made several acquisitions, creating an investment banking arm. In June 1981 it acquired Sanford I. Weill's Shearson Loeb Rhoades, which at the time was Wall Street's second-largest brokerage firm after Merrill Lynch, to form Shearson/American Express. Shearson became an independent subsidiary of American Express, retaining its own management and board of directors, and American Express operated as four principal units: Travel Related Services, Fireman's Fund Insurance Companies, the American Express International Banking Corporation, and Shearson Loeb Rhoades Inc.
After the purchase of Shearson, Weill was given the position of president of American Express in February 1983. Weill eventually grew restless, especially after his proposed private buy-out of the firm's Fireman's Fund Insurance was rejected, and resigned in August 1985. In 1984, American Express acquired Lehman Brothers and added it to the Shearson family, creating Shearson Lehman/American Express. Peter A. Cohen, chairman and CEO of Shearson/American Express, assumed the same posts with the new company. In 1988, Shearson Lehman acquired the E.F. Hutton & Co., a brokerage firm that was merged with the investment banking business. The investment banking arm was renamed Shearson Lehman Hutton, Inc.
In 1983, as part of CEO James Robinson's plan to expand into international banking of wealthy clients, Amex acquired Trade Development Bank of Geneva from Edmond Safra for US$550 million and Safra became a member of the board of directors of Amex. TDB executives were excluded from important company decisions and Safra unsuccessfully tried to repurchase the bank. Safra then opened a competing bank. In response, American Express launched an international smear campaign against Safra by inaccurately reporting to news and media outlets in that Safra was being investigated by the FBI for being involved in the Iran–Contra affair, along with drug trafficking and the mafia. All of the accusations were confirmed to be false and led to the resignation of Harry L. Freeman, public relations chief of American Express, after admitting to the entire scandal. In July 1989, American Express publicly apologized to Edmond Safra and donated $8 million to the charity of his choice. In 1990, American Express sold its Swiss banking operations to Compagnie de Banque et d'Investissements, which led to the creation of Union Bancaire Privée (UBP).
To move into a middle market that neither its Shearson brokerage arm nor its travel and entertainment card operation generally served, in 1984 American Express completed its acquisition of Investors Diversified Services (IDS), a major marketer of insurance and mutual funds with a sales force of 4,500 agents managing $16.6 billion in assets, and in 1995 renamed it American Express Financial Advisors.
In 1984, Amex launched the Platinum Card, billed as an "ultra-exclusive" credit card with a $250 annual fee. It was offered by invitation only to American Express customers with at least two years of tenure, significant spending, and excellent payment history.
In 1987, American Express introduced the Optima card, its first credit card product that did not have to be paid in full at the end of the month.
1990s
In 1991, a group of restaurants in Boston, including some that were exclusive to Amex, stopped accepting American Express while accepting and encouraging the use of Visa and Mastercard. The rationale was due to far lower fees as compared to American Express' fees at the time (which were about 4% for each transaction versus around 1.2% for Visa and Mastercard). The revolt, known as the "Boston Fee Party" (alluding to the Boston Tea Party), spread to restaurants across the United States, including in cities such as New York City, Chicago, and Los Angeles. Visa offered to pay the Fee Party's legal bills. Kenneth Chenault, then head of the firm's United States Consumer Card Group, cut fees to bring these restaurants back into the fold. American Express was, at the time, known for cutting its interchange fee to merchants and restaurants if they accepted only American Express and no other credit or charge cards. This prompted competitors such as Visa and Mastercard to file complaints as the tactics gave Amex exclusivity at restaurants. Capitalizing on this elitist image, American Express frequently mentioned such exclusive partnerships in its advertising. Aside from some holdouts including Neiman Marcus, which continued exclusivity until 2011, the practice largely ended in 1991.
In April 1992, American Express spun off First Data in an initial public offering.
In 1993, Harvey Golub became CEO of American Express. That year, American Express negotiated the sale of Shearson's retail brokerage and investment management business to Primerica. The Shearson business was merged with Primerica's Smith Barney to create Smith Barney Shearson.
In June 1994, American Express completed the spin-off of its remaining investment banking and institutional businesses as Lehman Brothers, ending its foray into the brokerage business.
In September 1994, the Optima True Grace card was introduced. The card was unique in that it offered a grace period on all purchases whether a balance was carried on the card or not, not charging interest on new purchases immediately for cards with unpaid balances. The card was discontinued a few years later.
In 1998, Amex launched the Blue credit card, targeted at young adults, in the UK after testing it in other countries. The card had a smart chip and users were encouraged to pay bills and get information via the company website. It launched in the U.S. in 1999. A television media campaign for Blue adopted the 1979 UK Synthpop hit "Cars" by Gary Numan as its theme music.
In 1999, American Express introduced the high-fee Centurion Card, often referred to as the "black card", which caters to an even more affluent customer segment. The card was initially available only to select users of the Platinum card. American Express created the card line amid rumors and urban legends in the 1980s that it produced an ultra-exclusive black card for elite users who could purchase anything with it.
2000 to 2009
In December 2000, American Express agreed to acquire the $226 million credit card portfolio of Bank of Hawaii, then a division of Pacific Century Financial Corporation. In January 2006, American Express sold its Bank of Hawaii card portfolio to MBNA America Bank.
Until 2004, Visa and Mastercard rules prohibited issuers of their cards from issuing American Express cards in the United States. This meant, as a practical matter, that U.S. banks could not issue American Express cards. These rules were struck down as a result of antitrust litigation brought by the United States Department of Justice. In January 2004, American Express reached a deal to have its cards issued by MBNA. Initially decried by Mastercard executives as nothing but an "experiment", the cards were issued beginning in October 2004. An agreement was reached regarding the acquisition of MBNA by Bank of America whereby Bank of America owned the customer loans and American Express processed the transactions. American Express dismissed Bank of America from its antitrust litigation against Visa, Mastercard, and other banks. The first card from the partnership, the Bank of America Rewards American Express card, was released on June 30, 2006.
In June 2005, American Express introduced ExpressPay, a contactless payment system based on wireless RFID. In July 2005, American Express issued the American Express Travelers Cheque Card, a stored-value card that serves the same purposes as an American Express Travelers Cheque, but can be used in stores like a credit card. Amex discontinued the card in October 2007.
On September 30, 2005, American Express completed the corporate spin-off of its American Express Financial Advisors unit, Ameriprise Financial, to its shareholders. In late 2005, H&R Block acquired American Express Tax & Business Services and then combined it with its RSM McGladrey Business Services Inc. subsidiary.
In 2006, the UK division of American Express joined the Product Red coalition and issued a Red Card, donating with each purchase through The Global Fund to Fight AIDS, Tuberculosis and Malaria to help African women and children with HIV/AIDS, malaria, and other diseases.
In late 2007, the company announced the Plum Card for small business owners.
In March 2008, American Express acquired the Corporate Payment Services business of General Electric, which primarily focused on providing purchasing card solutions for large global clients, for $1.1 billion in cash. The transaction added V-Payment to its product portfolio. V-Payment enables a tightly controlled, single-use card number.
In March 2008, Standard Chartered Bank acquired American Express Bank Ltd, the international banking subsidiary of American Express for $823 million.
On November 10, 2008, during the 2008 financial crisis, the company received Federal Reserve System approval to convert to a bank holding company, making it eligible for government assistance under the Troubled Asset Relief Program (TARP). At that time, American Express had total consolidated assets of about $127 billion. In June 2009, $3.39 billion in TARP funds were repaid plus $74.4 million in dividend payments. In July 2009, the company ended its obligations under TARP by buying back $340 million in Treasury warrants. As part of the conversion, the company reduced or closed many business lines of credit.
In 2009, American Express introduced the ZYNC charge card, a white card targeting young adults. The card was later discontinued.
2010 to 2019
In November 2011, Neiman Marcus, which gave general-purpose card exclusivity to American Express since the 1980s, began accepting cards using the Visa and Mastercard payment networks. In 2011, Amex launched the Blue Cash Preferred Card credit card.
In October 2013, Amex sold most of its publications: Travel + Leisure, Food & Wine, Executive Travel, Black Ink, and Departures magazines, to Time Inc. Time restructured the publications, which are now owned by Dotdash Meredith.
In 2013, the company opened its first airport lounge, offering access to certain cardmembers; the lounge network is branded Centurion Lounge.
In March 2014, American Express announced the corporate spin-off its corporate travel business as American Express Global Business Travel via the sale of 50% of its stake in the business to an investor group led by Certares LP for $900 million.
From Wikipedia’s article on American Express, shared under CC BY-SA 4.0.7