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American Express was founded in
1850, in Buffalo, New York, as a joint stock corporation that was a
merger of the express mail companies owned by Henry Wells (Wells &
Company), William Fargo (Livingston, Fargo & Company), and John
Butterfield (Butterfield, Wasson & Company), as an express business.
American Express first established its headquarters in a building at
the intersection of Jay Street and Hudson Street in the TriBeCa
section of Manhattan, and enjoyed a virtual monopoly on the movement
of express shipments (Goods, Securities, Currency, etc.) throughout
New York State. In 1874, American Express moved its headquarters to
65 Broadway in what was becoming the Financial District of
Manhattan, a location it was to retain through two buildings
American Express extended its
reach nationwide by arranging affiliations with other express
companies, (including Wells, Fargo – the replacement for the two
former companies that merged to form American Express.) railroads,
and steamship companies.
In 1882, American Express
started its expansion in the area of financial services by launching
a money order business to compete with the US Post Office's money
orders.
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. Mr. Fargo went to Marcellus Flemming Berry and asked him to
create a better solution than the traditional letter of credit. Mr.
Berry introduced the American Express Traveler's Cheque which was
launched in 1891 in denominations of $10, $20, $50, and $100.
Traveler's cheques established
American Express as a truly international company. In 1914, at the
outbreak of the First World War, American Express offices in Europe
were among the few companies to honor the letters of credit (issued
by various banks) held by Americans in Europe, despite other
financial institutions having refused to assist these stranded
travellers.
American Express became one of
the monopolies that President Theodore Roosevelt had the Interstate
Commerce Commission investigate during his administration. 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
US suffered a severe coal shortage and on December 26 President
Woodrow Wilson commandeered the railroads on behalf of the US
government to move US 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 radar.
The result was a new company called the American Railway Express
Agency 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 of
railroad lines, and had 10,000 offices, with over 30,000 employees).
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