American Express: The Unofficial History of the People Who Built the Great Financial Empire
The fullest narrative history, from freight forwarding to cards.
Summary
Grossman wrote an unauthorised history of American Express from its founding as an express freight company in 1850 through the conglomerate the firm had become by the mid-1980s.
The business story is one of repeated reinvention. American Express began moving parcels and valuables by rail, and when the express business faced competition and eventual nationalisation during the First World War, the company's travellers cheque business, launched in 1891, became its foundation. The travellers cheque is a remarkable product economically: the customer pays in advance, the company holds the float until the cheque is presented, and a portion is never presented at all. The charge card business launched in 1958 built on the same customer base and on the merchant relationships the travel business had created.
Grossman covers the salad oil swindle of 1963, in which a warehousing subsidiary's fraudulent receipts nearly destroyed the company and produced the situation Warren Buffett invested into; the acquisition programme of the 1980s under James Robinson, including Shearson, Lehman Brothers and Investors Diversified Services, which assembled a financial supermarket that was subsequently dismantled; and the internal politics of the period.
The reference has not verified the specific figures in this account. The book is from 1987 and ends before the Optima card losses, the Robinson departure and the Harvey Golub and Kenneth Chenault periods that made the modern company. It is useful for the float economics and the early history rather than as a current account.
Key takeaways 7
- The travellers cheque business generates revenue from float on customer money paid in advance and from cheques that are never presented at all.
- American Express reinvented itself repeatedly, moving from express freight to financial services as each business faced obsolescence or nationalisation.
- The charge card business was built on merchant relationships and an affluent customer base that the travel business had already created.
- The 1963 salad oil swindle nearly destroyed the company through a warehousing subsidiary whose fraudulent receipts created liabilities unrelated to the core businesses.
- The financial supermarket assembled through acquisitions in the 1980s did not produce the cross-selling benefits that justified it and was subsequently dismantled.
- A brand built on trust and affluence permits pricing that competitors offering identical functionality cannot match.
- The reference has not verified the specific figures in this unauthorised account.
Who should read it
Readers interested in float economics, charge card business models and a company that survived by repeatedly changing what it did.
Where it sits in the reference 2
Who recommended it 1 · 1 direct
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