The Tumultuous History of the Bank of America American Express: The People Who Built the Great Financial Empire 
By Peter Z. Grossman
2006/05 - Beard Books
1587982838 - Paperback - Reprint -  404 pp.

The engrossing inside story of how a major corporation prevailed to reach worldwide success.

Publisher Comments

Category: Banking & Finance

This title is part of the Business Histories list.

This fascinating book reveals the inside story of one of the best known and most influential corporations in the world. It is not just the history of a company, but of a business. The American Express Company is a consummate example of corporate success and endurance. The book will prove informative for all interested in the world of business, and it will reinforce the notion that fact can be more engrossing than fiction.

Author’s Note to the Reprint Edition:

American Express Twenty Years Later

If I were writing this history of the American Express Company today, I would undoubtedly be looking at the story differently from the way I saw it back in the 1980s. In the nearly 20 years that have passed since the original publication of the book, I have continued to explore the history of American Express and the industries it has been part of. But my work has been a different kind of exploration. As an academic economist since the early 1990s, I have written on topics of interest to scholars, particularly about the nineteenth century express cartel that included the American Express company.

Yes, if I were writing the book today, there would be a lot in here about cartel behavior and the industrial organization. But while I consider such topics of great interest, I don’t think the book would be better by including them.

American Express is, and should be, a story about how a company survives for more than a century, in the process, growing, shrinking, succeeding, failing, and above all managing to get by in spite of everything. Few companies ever accomplish such longevity. Big name firms come and go through merger or failure: Pan Am, Montgomery Ward, Douglas Aircraft, the names go on and on. But American Express celebrates its 156th birthday in 2006, and it shows few signs of closing up shop.
Survival in spite of everything: that is still the story of American Express. A lot has happened to the company since 1987 when my book went to press. Two new CEOs have taken the reins; a scandal cost several executives their jobs; units have been sold off; the company headquarters had to be temporarily abandoned (it was across the street from the World Trade Center); new products and services have been introduced and others dropped. There have been up years and down years, and there have been “expert” predictions that the company could not survive independently.

As you will see in the pages that follow, all of these sorts of things have happened before—including predictions of the company’s demise. And yet the company remains intact, independent, and prosperous. Profits for 2005 were, as of this writing, likely to be about $4 billion.

The decisions, good and bad, that have marked the company’s history, cannot be described by some grand theory or philosophy of management. Rather they have been the acts of individuals based on complex motivations and, often, quite unsystematic reasoning. Still, it is there people who, through the company’s long history, have used creative judgment, recognition of opportunity, and just plain luck to overcome blunders, unfortunate events, and faulty analyses that often threatened the company’s future. American Express, I wrote in 1987, endured and evolved the way it did not because of structure or theory, but rather because of its people. In that respect, nothing has changed in the last 20 years. The company faced various challenges, made many mistakes, but clearly, its people made more good decisions than bad ones, and as we begin a new century the company is doing very well.

Of course, in a dynamic business world, ever-faster paced, competitive on a global scale, the challenges for American Express in the years ahead will be formidable. It does have remarkable name recognition and several very successful products. But the games gets tougher all the time. Company officials from CEO through the ranks will be faced with momentous decisions in good times and bad, with luck with them or against them. American Express will endure only on long as its people can carry the company forward.

Peter Z. Grossman
December 2005
Indianapolis, IN 

From Henry Berry, Turnarounds and Workouts:

Poring over archives that go back to American Express’s founding in 1850, Grossman found that there was no magic formula that accounts for the company’s success. It was a combination of blind luck and adept management that allowed American Express to persevere during wars, varied political regimes, unpredictable economic conditions, and great social and technological change. “Corporations, even the largest, cannot create a world of their own making and so are reactive organizations,” notes the author. Nonetheless, Grossman also concedes that companies are not completely at the mercy of forces outside of their control. He observes that “Amexco had to make decisions, take steps, and adopt policies affecting its destiny.” 

That American Express remains a major corporation in the financial services industry speaks for itself that it has done things mostly right for over a century and a half. At times it seemed as though the company was doing little more than muddling through a difficult situation. However, the decisions made by its leaders, the policies that were put into effect, and the fundamental changes that were made are now seen, with a historical perspective, to be smart and effective enough for the company to get through its troubles.

There were times when outside forces proved to be beneficial beyond the company’s most optimistic imaginings. For example, the Civil War created circumstances ideally tailored to American Express’s services and ambitions. An 1875 article in Harper’s magazine describes the company’s activities during the War: “On the nearest and most remote fields the agents of the express were always found, venturing often where a picket-guard would hardly venture, collecting money, letters, and trophies for transmission to the ‘loved ones at home’.” American Express’s constant presence during the Civil War and the invaluable service it provided to tens of thousands of Union soldiers gained the company a reputation for dependability and financial security.

American Express struggled during the Great Depression, but the company survived. Bad partnerships and financial mismanagement made the economic distress of the time even more acute for American Express. Nonetheless, the company was saved by the Depression almost in spite of itself, says Grossman. The author reasons that, in less dire economic times, it would have been highly unlikely that the company would have recognized the severity of the varied problems and mustered the decisiveness to deal with them summarily as it did. Instead, measures adopted by the U. S. government to deal with the financial and economic crisis had the coincidental effect of also addressing some of the major problems threatening American Express’s survival.

With a sure hand, Grossman conveys the intriguing history of one of America’s preeminent corporations in American Express – The People Who Built the Great Financial Empire. By deftly establishing the context, selecting and organizing facts, summarizing the major personalities, and interpreting the factors contributing to American Express’s changing fortunes, the author has produced an eminently readable book.

Peter Z. Grossman’s specializations are law and economics, industrial organization, and economic history. His voluminous writings range from scholarly articles to a column on economic issues in the Indianapolis Star.

Some Original Reviews:

From Kirkus Reviews, April 15, 1987:

“A lively and engrossing account of how American Express managed, despite itself, to evolve from a pre-Civil War freight forwarder into a multinational purveyor of credit, financial, and travel services. Grossman offers a balanced, anecdotal reconstruction of the accident-prone enterprise’s checkered history. . . . Sure-fire for anyone interested in veil-piercing appreciation of this consequential corporation.”

From Philadelphia Inquirer, August 2, 1987, Review by Robert Sobel:

“[T]he American Express story proves not only arresting, but in the hands of Grossman, thought-provoking and, at times, even delightful . . .”.

Peter Z. Grossman has been the Clarence Efroymson Professor of Economics at Butler University, a position he has held since 1994. Dr. Grossman, who received his AB in philosophy from Columbia University and MA and Ph.D degrees in economics from Washington University, has specialized in the fields of law and economics, industrial organization, and economic history. Altogether, Dr. Grossman has published more than 150 works for both scholarly and general readers. He is a regular columnist on economic issues for The Indianapolis Star, and has contributed commentary to numerous magazines and newspapers.

Preface  vii
1. The Fourth Leg 1
2. The Treaty of Buffalo 38
3. J.C., TC, M.F., and MO 79
4. Chicago and Paris 96
5. The Decline and Fall of the Express 125
6. The Age of Entrepreneurs 158
7. A Different Version 188
8. Saved by the Depression 211
9. The Pooh-Bah and the Card 245
10. “Into the Twentieth Century” 294
11. Fireman’s Fund and the Future 346
12. Management Theory vs. American Express 365
Sources and Notes  370
Index  381

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