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The American Express Company: Experience, Resilience and Longevity

Building a company from the ground up is no easy feat, but keeping it afloat through changing economic times is a task only a few businesses master. American Express Company, known similarly as AmEx/Amex, has been around since the mid-1850’s and continues to grow. With a global presence and financial products for just about everyone, AmEx continues to plow through the opposition, creating a path for everyone else to follow in.

American Express (AmEx) came into existence as an express mail business in Albany, NY during the 1850’s. Founded as a joint stock corporation by merging the express companies of Wells & Company, Livingston, Fargo & Company, and Wells, Butterfield & Company, AmEx set up its headquarters in the TriBeCa section of Manhattan where it enjoyed its monopoly on the movement of goods throughout New York. AmEx eventually moved their headquarters to 65 Broadway in Manhattan which was fast becoming the financial district in New York, a location that would not suit them for long due to their rapidly expanding size.

Not wanting to be known as a one-trick pony, AmEx first dipped its feet into the financial services pool during 1882 by introducing its money order business in attempt to rival that of the United States Post Office. Fueled by a frustrating trip to Europe where J.C. Fargo, president of AmEx at the time, could not obtain cash except in large cities, AmEx later introduced the traveler’s cheques in 1891 in denominations of $10, $20, $50, and $100. Ten years later, AmEx was selling more than $6 million annually in cheques.

When World War I erupted in Europe in 1914, it left over 150,000 Americans stranded and without access to cash since the banks refused to pay against any foreign letters of credit or any other form of foreign paper. AmEx was able to cash the money orders/travelers cheques in full, enabling the stranded people a quick passage home. In 1915 AmEx officially entered the travel business and within ten years were taking tours to Europe, South America, the West Indies, and other destinations around the world.

Having a successful travel business in addition to its money order and travelers cheques business, AmEx seemed to be at the top of its game. But in 1929 everything almost came crashing down. For the last few years, Chase National Bank had been secretly buying up shares of AmEx and at one point owned 97% of AmEx. Had it not been for the small number of remaining shareholders refusing to sell as well as the passage of the Glass-Steagall Act, AmEx would have been fully absorbed by Chase.

The Great Depression left AmEx in shambles, and with the prospect of another World War looming, it took the experience and ingenuity of its employees to keep the company afloat. Near the end of the war, AmEx began to rebuild its business and enjoyed many years of growth. Though enjoying the spoils of a successful business, they noticed a shift in the way consumers were using their money. A new device, the credit card, had been introduced and was beginning to be widely used for consumers travel and entertainment expenses. Internal debate within AmEx flared, for many believed that AmEx should not offer credit cards because it would eat into their traveler’s cheques sales. Eventually the squabble ended, with AmEx offering a line of credit cards in order to capture some revenue rather than lose it all to competing companies.

AmEx issued its first credit card in 1958, and within five years over one million cards had been issued to use in about 85,000 establishments domestically and internationally. Their card business grew steadily, generating a hefty profit and allowing them to introduce different lines of cards with varying benefits. To everyone’s great surprise, their traveler’s cheques business continued to grow as well.

During the 1970’s, AmEx aspired to be a global conglomerate, and made several acquisitions to make it happen. The acquisitions didn’t quite pan out as hoped, and AmEx decided to embark on a different path; to build up its core business and rid itself of the “dead weight.” In 1986 this proved to be successful, as earnings exceeded $1 billion for the first time in company history and all of their divisions posted record-breaking profits.

No one thought that after having their banner year in 1986 that the very next year was very close to being the undoing of AmEx. Having added $950 million to their reserves against outstanding loans from Latin America and watching the U.S. stock market drop to its lowest point since the Great Depression, AmEx began to deteriorate. Even after adding a new revolving credit card line, their stake in the U.S. credit card market fell. Merchants staged a revolt against AmEx and their “unfairly high rates,” and countries abroad were trying to talk their customers out of using credit cards. From the mouth of the companies chief executive years later, “If not for the strength of our brand name, American Express would have collapsed by the late 1980s.”

AmEx separated from several businesses to concentrate on shoring up its main payment, travel, and financial planning businesses to strengthen its balance sheet. They slashed over $3 billion from their cost base affording them the opportunity to invest in new and exciting products and services. They also rebuilt their relationship with merchants, helping to make the AmEx cards more widely accepted. By forging relationships with businesses like airlines and retailers, it allowed AmEx to provide premium products and services to their customers.

By the time AmEx celebrated its 150th anniversary in 2000, they were back up and running at full strength. Earnings, market share, and core businesses were strong, but internally they were taking steps to avoid the economic issues looming on the horizon.

9/11 changed America forever, and it also changed AmEx. Even with the tragedy that unfolded, AmEx operations continued sans interruption. Employees pulled together to meet the needs of countless customers the world over who had nowhere else to turn. AmEx continued to be tested in the coming months following 9/11, but the entire organization pushed forward not only honoring the companies tradition to provide extraordinary customer service, but raising the bar even higher.

Every setback that AmEx has encountered throughout its 160 year history has allowed it to become even stronger. By constantly adapting to the ever-changing financial landscape while continuing to provide world-class services to its customers, AmEx continues to prove it is here for the long haul.

American Express cards are backed by a company that consistently ranks above all other credit-card banks for providing peerless customer service. American Express credit cards can be found at the top of this page

American Express: A History of Leadership and Financial Excellence

Founded in 1850, American Express has weathered numerous domestic and international changes. The company has weathered these changes quite well, and continues to offer a wide array of financial and travel services to customers the world over.

When most people hear the name American Express, they think of the credit cards the company issues. What they don’t know is that, long before it issued credit cards, American Express was a company that did what its name indicates—it was an express delivery company serving the United States of America, carrying packages around the country. Though today it is one of the world’s largest global payment companies, with a presence in more than 130 countries, its beginnings had little to do with financial matters.

American Express began in New York in 1950, a time when many east coasters were moving west. The U.S. Postal Service was slow, expensive, and unreliable (sometimes items were lost or stolen); it didn’t deliver everywhere; and it only carried letter-sized envelopes. It hardly met the needs of a growing nation, and the climate was ripe for something new. Seizing the opportunity, several entrepreneurs began express companies that became integral in connecting the United States as it grew, with horseback riders and stagecoach drivers carrying all kinds of packages from the established eastern cities to the expanding west. American Express became known as the best of these companies.

After realizing that its largest client base was banks, American Express limited its delivery services to smaller packages. Because of the small size and ease of transport, delivering financial packages such as stock certificates, notes, and currency to banks turned a good profit. The company began offering its own financial products, introducing money orders in 1882 and travelers cheques in 1891, with great success. These financial endeavors led to relationships with many European banks. The American Express name became visible around Europe, and its first office there opened in Paris in 1895. A London office followed the next year, and by 1910, offices were located in Southampton, Liverpool, Hamburg, Berlin, Bremen, Antwerp, Rotterdam, Copenhagen, Naples and Genoa.

As history passed, the company’s evolution unfolded in response to changing eras and events on the world scene. As American Express grew in Europe, millions of those Europeans were beginning new lives in America. Immigrants arriving on Ellis Island needed to exchange currencies, but there were no official currency exchange services. Independent money changers were swindling the immigrants, so in 1905, the U.S. Immigration Department asked American Express to provide official currency exchange services on Ellis Island.

A decade later, American Express was inadvertently thrust into the travel business by World War I. The summer of 1914 found 150,000 American tourists stranded in Europe. Banks there had stopped honoring foreign credit, so many of these tourists had no access to money and no way to get home. American Express offices throughout Europe provided help, cashing travelers cheques and money orders so Americans could arrange travel back to the states. American Express and nine U.S. banks then shipped $10 million in gold to Europe, allowing local banks to honor foreign drafts again. This allowed the remaining American tourists to book passage home. In 1915, American Express officially entered the travel business, and before long it was offering tours throughout the world. The war ended, and in 1922, an American Express ship completed the first ever cruise around the world. As a result, the company became known for providing luxury travel.

The stock market crashed in 1929, and because it was not technically a banking institution, American Express did not close during the three day bank holiday that followed. Once again it was able to fill a void by offering bank services. The company had enough cash reserves to cash all travelers cheques and money orders, and was even able to cash those issued by other banks that had gone out of business. Though the 1930s were difficult, the company hung on.

Its experience in WWI allowed American Express to navigate and survive the trials of WWII, and its European offices actually remained open until the last possible moment in countries about to be invaded. In England, the company helped evacuate Allied military leaders and diplomats, as well as British children.

After the war the company grew tremendously, and travel abroad increased. People began using credit cards for travel and entertainment, and, not wanting to lose customers to competing credit-card banks, American Express created its first credit card in 1958. Within five years, more than one million of those cards were being used around the world. The American Express Gold Card was introduced in 1966.

From the late 1970s through the early ’90s, American Express experienced acquisitions, mergers, merchant complaints about high interest rates, lowered acceptance of its products overseas, and stock market fluctuations. Nearly having to fold and floating only on its respected brand name, the company realized it had to refocus. It began concentrating on its core services of payment, travel, and financial planning. It worked hard to rebuild relationships with merchants and increase its card acceptance worldwide, and began partnerships with airlines, banks, and retailers. By its 150th anniversary in 2000, the company was once again going strong.

September 11, 2001 brought the biggest crisis the company had ever faced. Eleven of the 4,000+ Amex employees in Lower Manhattan that day died; eight were hospitalized; and dozens more lost loved ones. Responding to the tragedy, employees scrambled to serve its hundreds of thousands of clients. Because of the damage to American Express’ headquarters building, which was across the street from Ground Zero, thousands of employees spent the next eight or more months working from other locations. Once again, however, those employees rose to the occasion, working together to comfort and serve whomever they could.

Several core principles have guided American Express through its ups and downs. The company operates by the following values:

• Customer Commitment
  
• Quality
  
• Integrity
  
• Teamwork
  
• Respect for People
  
• Good Citizenship
  
• A Will to Win
  
• Personal Accountability
  

These values are applied in several ways. Like many large companies, American Express claims corporate responsibility through volunteerism and philanthropy, focusing on three areas: preserving cultural heritage, developing leadership, and serving communities. The company donates to programs and organizations that preserve or promote the arts, culture, historic landmarks, and public spaces, with recent projects including the Brooklyn Museum and the Chicago Symphony Orchestra Association.

It also partners with the National Trust for Historic Preservation and the World Monuments Fund. These projects have included preservation work on the Statue of Liberty and other historic sites throughout the United States and the world. Many of these projects work to promote sustainable tourism, working to minimize any negative impact on historic sites.

Recognizing the importance of leadership, American Express puts great effort into attracting, developing, and retaining employees who are leaders. To serve the broader community, the company extends leadership development opportunities to non-profit organizations, with special interest given to programs that focus on the arts, environment, higher education, and social service. Most of these are within the U.S., but some are offered to non-domestic programs to help develop entrepreneurs there into business leaders. Information on applying for leadership grants can be found at http://home3.americanexpress.com/corp/gb/howto.asp.

Finally, American Express encourages its workers to use their time and money to help others, and tens of thousands of employees do this by feeding the hungry, building homes, cleaning up the environment, mentoring students, and many other projects. The company supports organizations that provide ongoing opportunities for its employees to volunteer, funds immediate and long-term relief efforts to help communities recovering from national disasters, and contributes to programs that prepare for such emergencies.

Today, American Express continues to provide charge and credit cards to consumers, small businesses, and corporations. These cards include several rewards cards offering a variety of benefits. American Express is the world's largest travel agency, with several booking options and lots of online planning resources. Numerous other financial resources are offered on its Web site. By getting back to its roots and doing what it does best, American Express appears poised for a bright future.