The History of American Express by Todd Holliday

In 1850, American Express was started as a courier service and was based out of Buffalo, New York. It started as a merger of three courier companies known as Wells and Company, Livingston, Fargo and Company and by Wells, Butterfield and Company. The same founders of American Express also went on to found Wells Fargo Bank.

Immediately, American Express began expanding its business by purchasing the headquarters for its stables and in 1854 purchased a lot on Vesey Street in New York City. In 1874 American Express ended up renting a building in New York’s prosperous financial districts.

In the beginning, American Express controlled 71,000 miles of rail road track. This enabled them to dominate the courier industry. It was not until 1917 that the U.S. Government took control of the railway tracks in order to move supplies around the country during World War I. By this time, American Express was a very large diversified company. Their railway businesses alone employed over 30,000 people.

Due to anti-trust laws of the early 1900s the ICC or Interstate Commerce Commission, American Express was forced to give up its “express” division and a new company was formed called the American Railway Express.

In 1882 American Express began to compete with the U.S. Postal Service, by making the availability of money orders as part of their service. In 1891, American Express began to issue travelers checks in denominations of $10, $20, $50, and $100. This inspiration was the brainstorm of one of its top executives and founders, J.C. Fargo, after took a trip to Europe and found that he could only get cash in large cities. This division turned out to be very profitable for American Express. They benefited by charging up front fees for the checks. Secondly, they benefited from investing the money that they collected from their customers. While a customer’s travelers check remained un cashed, they were able to invest that money and keep the profits for themselves.

Along with traveler’s check’s American Express entered into the travel industry as well. They provided luxury steamship travel all around the world. This service went very well with its traveler’s check division.

In 1957, American Express issued its first credit card as a competitor to the “Diner’s Club” card. The first credit card they introduced was actually a piece of paper with your account number on it. However, the demand for the credit card was very high and American Express issued 250,000 cards prior to its official launch date. The cards annual fee was even $1 higher than the Diner’s Club $6 annual fee. However, this gave American Express a sort of superiority over the Diner’s Club card.

In 1966, American Express introduced the Gold Card and eventually introduced the Platinum Card as well. These credit cards put its members in an elite club. If you have a gold or platinum American Express card, you probably have an unlimited spending ability. Furthermore, American Express did not charge its cardholders interest for any purchases, however cardholders are expected to pay the account balance in full every month. The American Express Gold and Platinum credit cards carry prestige in most places. The world famous ultra high end retailer Neimun Marcus, will only accept American Express or Cash.

During the early 1980s, American Express entered into a joint venture with Warner Communications which brought about the creation of MTV, Nicklodeon and the Movie Channel. This partnership was short lived and was dissolved in 1984 when American Express sold its interests it had to a company called Viacom.

American Express is a leader and innovator in the credit card industry. American Express no longer only offer their exclusive Gold and Platinum cards. They also offer a wide array of credit cards that do not require its users to pay the balance in full every month. These cards are like Visa and MasterCard and charge its customers interest for purchases made.

The name American Express is now worth over $20 billion dollars. They are long standing company that has evolved itself over time. Originally started as a courier service, American Express has dabbled in everything from the travel and financial industry to the world of media. Its 150 year history has poised American Express to become an icon of American history.