The 175-Year History of American Express: From Railroads to Premium Credit Cards

American Express is a global household name and dominant player in the financial world, with around 133 million cardholders worldwide. The history of American Express spans nearly two centuries, with the company moving with the times, developing products and services to meet the needs of its target customers, and integrating the latest tech. This ability to adapt and shift its business model has enabled American Express to survive – and even thrive – through several periods of economic instability.

In this article, our experts at Business2Community have gathered all the important information you need to understand how and why American Express has endured for 175 years (and much more).

Who Owns American Express?

The American Express Company is publicly traded on the New York Stock Exchange (NYSE) under the ticker symbol AXP. More than half of American Express is owned by institutional investors. The largest shareholder, with 20% of shares outstanding, is currently Berkshire Hathaway Inc. In contrast, the second and third biggest shareholders – Vanguard and Blackrock – each hold around 6% of the stock.

Individual investors own around 13% of the American Express Company and public company ownership accounts for around 20 percent of shares outstanding.

The American Express Company has a long history. It all began in 1841, when one of the founders of American Express, Henry Wells, decided to launch his own express company. Initially serving just New York City and Buffalo, Wells & Company grew to also cover Boston and Albany. This left the west of Buffalo to another express company owned by William G. Fargo.

In 1849, John Butterfield also entered the express business in direct competition with Wells & Company. Later that year, he suggested a merger of the three express companies, and, on March 18, 1850, they joined forces to launch the American Express Company, responsible for safely transporting money and other valuables.

Henry Wells was elected as the American Express Company’s first president and he quickly led the business to considerable success and rapid expansion.

Who is the CEO of American Express?

Stephen J Squeri became Chairman and Chief Executive Officer of American Express in February 2018 and he still holds both roles today.

Under Stephen’s leadership, American Express has launched innovative new payment, financial management, and lifestyle services, expanded strategic partnerships, enhanced its digital capabilities, repositioned its international organization, and expanded its global merchant network.

Stephen first joined American Express in 1985 as a manager in the Travelers Cheque Group. Since then, he has moved up the ranks, holding a variety of senior roles within American Express, including Vice Chairman from 2015 until 2018.

Growth and Development of American Express

Since the beginning, American Express has focused on finding new ways to serve its customers. Over almost 175 years, the company has evolved and shifted its services from freight forwarding to travel to cards, through to digital products and services.

Here are some key dates in the American Express Company’s growth, diversification, and product offerings.

1850-1862: American Express Establishes Itself in Express Rail Services

Starting with an initial capital of $150,000, the American Express Company’s focus was on the express delivery of valuables and packages.

With Henry Wells at the helm, American Express expanded rapidly and acquired several small express companies in the Midwest. The company was quick to sign contracts with the first railroads and even operated on the waterways.

However, courtesy of an agreement with its main rival, Adams and Co. (later renamed Adams Express), American Express was limited to operating north and west of New York, with Adams having access to the south and east.

Henry Wells had long dreamed of building a transcontinental express rail service but he was unable to get his idea approved by the American Express Board of Directors. However, in 1852, he succeeded in convincing them to approve an independent venture called the Wells Fargo & Company that would provide express and banking services in the state of California.

Wells Fargo & Company proved invaluable in the rapid growth of American Express. For one, it facilitated the somewhat clandestine acquisition of critical railway rights through the creation of a new company owned by the president of Wells Fargo.

The partnership also led to the launch of a joint venture known as the Overland Mail Co. This venture allowed Henry Wells to live out his dreams, with the company winning a transcontinental mail contract from the United States Postal Service. It also enabled William G. Fargo’s brother, James, to set up Merchants Dispatch in 1858 to provide a fast, bulk freight express service for merchants.

By 1862, the company boasted 890 offices, 1,500 colleagues, and an express railway network stretching from the East Coast to Minnesota.

1862-1880: Fierce Competition Leads to Loss of Supremacy

The express industry thrived during the American Civil War. For the American Express Company, it presented an opportunity to ship army supplies and deliver election ballots to troops in the field.

However, financial raiders began to target the industry soon after the Civil War. In 1866, a first raid attempt by National Bankers Express Co. was avoided thanks to an agreement between American Express and two other key players in the express industry – Adams Express and United States Express.

Later that year, the Merchants Union Express Company was established and set about trying to destroy American Express and its counterparts. This attempt had much more impact. In 1868, after suffering considerable losses, American Express, Adams Express, and United States Express finally agreed to divide up the express and freight business and pool and share the earnings.

As a result, the American Express Company lost its stronghold in the express business and was eventually forced to merge with the Merchants Union Express Company to form the American Merchants Union Express Company. This name would be shortened back to the American Express Company in 1873.

In 1868, Henry Wells also retired as president and was replaced by William G. Fargo.

1880-1900: American Express Begins to Diversify

William G. Fargo died in 1881 and his brother was elected as the new president of the American Express Company. James Fargo had played a significant role during his brother’s presidency, having successfully expanded Merchants Dispatch to Europe, giving American Express a lucrative sideline.

However, his rise to the top of American Express marked the start of a new era for the company. It was under his leadership that the American Express Company first began to move away from the express industry into financial services.

In the late 19th century and early 20th century, American Express launched several new financial products and travel-related services such as the American Express Money Order in 1882 and the American Express Travelers Cheque in 1891.

The American Express Money Order was an immediate success, despite the post office having already introduced a postal money order some 18 years previously. This was because the value of a postal money order could easily be altered. James Fargo’s money order was safer and well-received, with over 250,000 issued in the first year alone.

The traveler’s cheque was also seen as a solution to a frustrating problem. Before its launch, international travelers could only send money from the United States to Europe through a complicated letter of credit. Again, the American Express Travelers Cheque offered a significant improvement and this was quickly recognized.

1900-1929: American Express Exits the Express Business

The start of the twentieth century proved to be a difficult period for the express business, as increased costs from the railroads and workers’ pay and legislative restrictions steadily eroded express profits.

In 1914, James Fargo retired and was replaced as president by George C. Taylor. By this stage, it had become clear that the express industry was no longer lucrative. George C Taylor was quick to act and led an expansion of the American Express Company’s banking and travel services.

The American Express Company’s first travel department opened in 1915. This has been credited with saving the company since the domestic express industry was nationalized in 1918 with the arrival of the First World War.

George C. Taylor was also responsible for establishing the subsidiary business, American Express International Banking Corp. Its goal was to support the expansion of international banking operations, which grew rapidly in Asia throughout the 1920s and 1930s.

1929-1945: Navigating the Great Depression and the Second World War

Thanks to this success, American Express was targeted for acquisition by the Chase National Bank. Using dummies, its chairman gradually purchased American Express stock until he had enough to take control and have himself elected as the company’s first chairman in 1929.

The following year, Chase merged with the Equitable Trust to become the biggest bank in the world. It was a tough time for American Express executives with in-fighting among the Board of Directors and a worsening financial climate in the United States following the 1929 stock market crash.

This was the start of the Great Depression which would last until the beginning of the Second World War in 1939. Between 1930 and 1933, roughly a third of US banks failed due to a series of banking panics.

In an attempt to help the banks recover, then-President Franklin D. Roosevelt announced a bank holiday in March 1933. For a week, the public had no access to banks or banking services, bringing commerce to a halt. But American Express wasn’t a bank and didn’t have to close for the national bank holiday. It stayed open to redeem traveler’s cheques which, ultimately, enabled it to make money throughout the Great Depression and the Second World War.

1945-1975: American Express Enters the Charge Card Business

After the war and throughout the 1950s, American Express enjoyed a solid period of expansion, fueled by the burgeoning travel industry.

Then, following the launch and immediate success of the first credit card, Diners Club, American Express executives decided to diversify once again. In 1958, American Express introduced the American Express charge card.

The new card was an overnight success with more than 250,000 applications in hand on launch day. This signaled the beginning of an era of unprecedented growth. American Express’ earnings rose from $8.4 million in 1959 to $85 million by 1970.

However, in its haste to launch its card business, American Express had failed to adequately prepare. Just a few months after launching, it was behind with billing, struggling to collect payments, and experiencing a customer service crisis.

By 1961, while there were over 800,000 American Express cardholders, American Express had sunk more than $13 million in the venture and was not even close to breaking even, let alone making a profit.

Under the guidance of George Waters, American Express increased the percentage it charged a business for accepting the card from 3% to 4% and upped the card’s annual fee from $6 to $8. In doing so, American Express gave itself a challenge to overcome in convincing customers that it was the best charge card on the market.

George Waters wanted to understand where there were opportunities to improve customer experience. He read customer complaints every day and assigned staff to work on finding a solution to each problem he encountered.

He also worked to promote American Express to businesses, explaining why they’d raised rates, and agreeing to reinvest 0.5% of total charge card sales in advertising to encourage card members to spend with merchants that accepted American Express.

It worked. By the end of 1963, the card division was finally making a profit, marking a new era of growth for the company.

The late 1960s and early 1970s represent a strong period for American Express. Its income grew steadily, and American Express executives focused on expanding the company’s financial services even further. In 1966, American Express acquired W.H. Morton & Co., an investment banking firm, and two years later, it bought the Fireman’s Fund Insurance Company, one of the country’s largest property insurers.

American Express was unmarked by the 1971 international monetary crisis. It continued to cash traveler’s checks at the original exchange rate and the American Express card continued to be accepted internationally. The company also helped thousands of tourists caught short abroad through emergency funds, and its international banking arm offered advice to corporate clients on how to protect their foreign payments and assets.

In 1972, American Express joined the New York Stock Exchange (NYSE) under the ticker symbol AXP.

1975-1987: Expansion, Reorganization, and Acquisitions

Later into the 1970s, the integrity of American Express as an unregulated financial services provider began to be challenged. It also received unwanted publicity when four acquisition attempts in a row failed amid accusations of corporate immorality.

But, American Express finally made the big acquisition it had been looking for in 1982, buying Shearson Loeb Rhoades Inc. As an independently operated subsidiary, Shearson went on to acquire several other well-respected businesses.

In 1982, American Express launched a complete reorganization under a new holding company called American Express Corp. The company’s travel services became a subsidiary, American Express Travel Related Services.

American Express continued to expand throughout the 80s, acquiring Ayco Corp., a financial counseling firm, and the financial planning company Investors Diversified Services, Inc. In 1984, Shearson acquired Lehman Bros. Kuhn Loeb, a respected Wall Street brokerage firm, and formed Shearson Lehman Brothers Holdings Inc.

Following intense competition in the insurance industry and declining profits in 1985, American Express announced that it would gradually sell off Fireman’s Fund Insurance Company. By 1988, its holding was reduced to 20 percent, and American Express formally exited the insurance business.

1987-1990: Increased Competition and Millions Lost to Bad Debt

1987 was an incredibly difficult year for most financial companies. The stock market crash on Black Monday shook Shearson Lehman, and, amid fears about Third World debt, American Express Bank added almost $1 billion to its reserves.

Despite these pressures, American Express’s Travel Related Services continued to thrive. In the same year, American Express introduced its first full credit card, the Optima Card.

By the end of the decade, some 33 million American Express cardholders were able to use their cards in 2.7 million places. However, American Express had positioned itself as a premium rather than a mainstream offering. Its card cost more than Visa or MasterCard and it charged merchants a higher percentage of the bills than its competitors. It pursued quality over quantity.

In the early 1990s, American Express began to experience fading customer loyalty and suffered from competition from lower-priced bank cards. In 1991, American Express revealed that its Optima card had lost millions of dollars in write-offs. At the same time, American Express Travel Related Services was losing out to competition from cheap bank cards and debit cards. As recession loomed, American Express’ profits fell significantly.

1990-2000: Fighting Back to Reclaim an Industry Leading Position

In an attempt to recover its position in the industry, American Express launched an aggressive marketing strategy. For example, in response to Visa’s 1988 Olympic Games advertising campaign, American Express ran commercials and ads featuring the Olympic athletes. This marked the start of a series of advertising battles between the two firms.

In 1993, American Express won the charge card contract of the General Services Administration, considered to be the largest corporate card account in the world.

During the 1990s, American Express’ directors focused on growing international operations, and, in 1997, the company introduced 20 new products into foreign markets, including cobranded cards with France’s Credit Lyonnais and Qantas Airlines in Australia.

The arrival of the internet provided American Express with new avenues for its banking and travel operations. In 1997, the company launched a member website that gave American Express cardholders complete access to their accounts online.

American Express continued to explore digital enhancements to service and security. In 1999, it launched the US’ first smartcard, Blue. Blue was the first of its kind, containing a computer chip as well as the traditional  magnetic strip to make shopping online easy and secure.

By the time America entered the 00s, American Express had restored its position as a leader in the industry.

2000-Present Day: Keeping Premium Services as the Value Proposition

Since the start of the 21st Century, American Express has continued to develop a strong ecommerce presence and build consumer confidence in online shopping.

Despite the challenges, American Express has never given up on its positioning as a premium services provider. Its credit cards still require annual fees and are subject to comparatively strict eligibility criteria. However, it also offers an enticing range of rewards for regular card users.

In 2024, the American Express brand is recognized globally and the number of cards in circulation has grown steadily. As of 2022, some 133 million people worldwide had an American Express card.

While most recognized as a credit card provider, American Express continues to offer a wide range of travel and banking services such as loans and savings accounts.

Where is the American Express HQ?

American Express has been based in the World Financial Center in New York since 1986. The company was forced to relocate temporarily in 2001, following the September 11 attacks, due to its proximity to the World Trade Center.

History of the American Express Logo

The American Express logo is simple and has seen minimal change throughout recent history. The globally recognized logo we see today has only been subtly altered since the blue box was introduced in 1975.

The most recent changes were made in 2018 to make the logo more suitable for digital use.

“The challenge for the designers was strengthening a big brand for the small-space digital world, where it can be difficult to make a visual impact with detailed marks,” said Pentagram, the design agency that worked with American Express on the rebrand. “At the same time, the branding had to be effective in the physical world, where identities come to life in large-scale, environmental applications.”

The Future of American Express

American Express is no stranger to diversification. Its ability to adapt to the changing landscape has carried it through many difficult times throughout its history. But what does the future hold for American Express?

Thanks to its unwavering commitment to offering a premium product, American Express is well-supported by an affluent customer base. Even against the backdrop of a global cost-of-living crisis, American Express’ customers appear to be spending and traveling as much as ever.

At the start of 2024, the future looked bright for American Express, with the company revealing that they were expecting a better-than-forecast profit for the full year. This followed news of record revenue for the company in 2023 of $60.5 billion.

American Express CEO Stephen J Squeri said: “We have achieved what we set out to do, and we are ahead of where we thought we’d be on our journey.”

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