Wells, Henry

views updated May 18 2018

Henry Wells

Born: December 12, 1805
Thetford, Vermont
Died: December 10, 1878
Glasgow, Scotland
Cofounder, American Express

Henry Wells was a nineteenth century man of vision. A shipper by trade, he believed the eastern portion of the United States was a wide open market, just waiting for someone to come along and claim it. In 1850, he did just that. With the help of several partners, including William Fargo (1818-1881), he launched the American Express Company and forever changed how goods were shipped. Wells began American Express as a shipping company, but over time with the introduction of Travelers Cheques, charge cards, and traveler services, his business ultimately changed the way people travel throughout the world.

"This is a great country and a greater people!"

Drawn to Shipping

Henry Wells was born in Vermont, where he spent the first eight years of his life before his family moved to New York. As a youngster Wells worked on a farm until he was old enough to apprentice with a tanning and shoemaking firm called Jessup & Palmer. He eventually abandoned shoemaking to work in shipping on the Erie Canal, which ran from Pennsylvania to upstate New York.

Wells went to work in the offices of the Hamden Express Company, which was based in Albany, New York. The company was one of the earliest businesses dedicated to express shipping at the time. Harnden had realized businessmen and merchants needed a faster, reliable way to transport goods and money from city to city. At the time, goods were transported on ships or barges, by stagecoach and horseback. Delivery often took many days or weeks. With the arrival of railway travel, companies like Hamden Express guaranteed delivery of goods quickly, and business was soon flourishing.

Young Wells understood the potential of express shipping, and believed Hamden should expand his business to other cities and states on the East Coast. Harden was reluctant, so Wells left the company with plans for starting his own delivery firm that would run from Albany to Buffalo, New York. He eventually formed a partnership called Wells & Company, which "messengered," or delivered, trunks filled with small valuables, letters, and funds between the two cities. Messenger services offered a secure form of express shipping; packages and papers were delivered within a certain time for an agreed-upon price, and a person employed by the firm accompanied the shipments at all times. Such services were still relatively new in the United States.

Wells and Fargo Form American Express

While working at his messenger service, Wells met another like-minded young man named William G. Fargo. The two soon began an express partnership of their own that ran between New York and Michigan. Similar shipping businesses had popped up all over the East Coast and into the Midwest, and the competition soon became fierce. In order to survive and thrive, Wells and Fargo, along with several rival businesses, combined their operations and formed the American Express Company in March 1850. Wells was elected the new firm's president, a post he held for the next eighteen years.

Wells and Fargo had high hopes for American Express, and wanted to branch out from the East Coast and midwestern states to the West Coast. Gold had been discovered in California and thousands were flocking West to seek their fortunes. The other business partners in American Express did not want to expand westward, and certainly not all the way to California. California, which had just been purchased by the United States from Mexico (along with New Mexico and Texas in 1848), seemed foreign and very far away to most New Yorkers. Wells and Fargo, however, were not deterred; instead they raised money for a new venture that would offer a host of services for gold miners and businessmen out West.

In 1852, with $300,000 in financial backing, Wells and Fargo created Wells, Fargo & Company for the purpose of providing express services to western cities. The company was based in New York and Edwin B. Morgan served as the first president. Within a few months, tiny offices opened in San Francisco and Sacramento, California. The firm bought and sold gold dust and offered banking and express shipping services. Wells decided to travel to California himself in 1853, just over six months after the new company began its business services. He was delighted with what he found in California, and he had first-hand proof that Wells, Fargo & Company had turned out to be an excellent business venture. The trip was also the realization of a lifelong dream since Wells had always wanted to travel West.

Later Success

By the 1860s, Wells had become a well-known and very successful businessman. Both of his companies, American Express and Wells, Fargo & Company, thrived. The two firms worked together on occasion, creating new businesses and always keeping a constant eye on the growing competition. Wells continually looked for ways to make shipping and communication faster and more reliable. Through his efforts, the first telegraph lines were built crisscrossing the United States. Wells was also generous with his wealth, donating large sums to various charities and educational causes.

Henry Wells gave part of his fortune to education. In 1868, he founded Wells Seminary (later Wells College) in Aurora, New York. He also established schools in several cities that were dedicated to helping people who stammered, a physical condition that he, himself, suffered from.

Wells retired as president of American Express in 1868 yet remained active in business and community affairs. He also traveled extensively. While visiting Scotland in 1878, Henry Wells died two days shy of his seventy-third birthday.

For More Information

Books

Grossman, Peter Z. American Express: An Unauthorized History. New York: Crown Publishing, 1987.

Hatch, Alden. American Express: A Century of Service. Garden City, NY: Doubleday, 1950.

Reed, Ralph Thomas. American Express: Its Origin and Growth. New York: Newcomen Society in North America, 1952.

Periodicals

Kramp, Allison. "Recovery in the Cards: American Express Comes Back After 2001." Barron's (April 29, 2002): p.T6.

Polyak, Ilana. "Sweetening a Stinker: American Express Makes a Bold Attempt to Turn Around a Dysfunctional Fund Family." Money (April 1, 2002): p. 41+.

Web Sites

American Express Company. [On-line] http://www.americanexpress.com (accessed on August 15, 2002).

Wells Fargo. [On-line] http://www.wellsfargo.com (accessed on August 15, 2002).

Leading American Businesses

Wells, Henry (1805-1878)

views updated May 29 2018

Henry Wells (1805-1878)

Sources

Founder, american express; organizing partner, wells fargo and co.

Stuttering Teacher. Born in Vermont, where his father was a Congregationalist preacher, Henry Wells was a big, self-educated man who dressed sharply and spoke with a stutter. One of his first jobs was as a teacher at a school for students with speech defects, but, as his own problem did not improve, he lost the confidence of his charges and sought his fortune in the field of transportation. He took a job as a ticket agent facilitating the movement of freight and passengers for shippers on Lake Erie. Then, in 1839, he came to the attention of William Harnden, an entrepreneur who had just begun offering Harnden’s Package Express, a delivery service from Boston to Manhattan that moved valuables requiring special handling more quickly (between those cities) than the U.S. Mail. Harnden’s business flourished. When he extended his service to Albany, he hired Wells to manage the new station.

Express Career. Wells saw a grand future for express delivery, and he had ambitious ideas about expanding Hern-den’s service, first to Buffalo and then throughout New York. When he failed to convince the boss, Wells quit in 1841 and sold his friend George Pomeroy on the idea of initiating an express service between Buffalo and Albany. He and Pomeroy alternated trips carrying a valise of packages on a train and stagecoach between the two cities, a treacherous trip that took three days and four nights. After three trips, Pomeroy quit, and Wells, with the help of an investor, bought him out. Within eighteen months a rail link was completed between Albany and Buffalo, and Wells and Company became a thriving business, aided significantly by a failed grocer turned express agent named William George Fargo. When Hernden died in 1845 at the age of thirty-two, Wells bought his express business and moved his offices to New York. He sold a portion of his routes in 1846 to Fargo, who expanded his business as aggressively as Wells, and by the end of the 1840s Wells and Fargo controlled the express freight business in the state of New York, which had increased a hundredfold during the decade.

American Express. The lucrative New York express attracted competitors, the most serious of whom was entrepreneur John Butterfield, partner in the firm of Butterfield, Wasson and Company. Butterfield negotiated freight contracts on the same terms as Wells, and then a price war began. Soon, both companies were losing money, and the principals decided to merge their companies. In 1850 Butterfield engineered a merger of Wells and Company, Livingston, Fargo and Company, and his own company. The new organization, called American Express, was instituted for ten years to serve as an umbrella corporation for the three merging companies, which continued to operate more or less autonomously. It was an uneasy alliance controlled initially by Butterfield, the most powerful of the partners, who sought to consolidate his authority. Wells was elected president, but it was a hollow office. Wells showed minimal interest in the company and went into semiretirement at the age of forty-five, intending to enjoy his riches. But the ongoing power struggles between Butterfield and Fargo required Wells to act as mediator. As Butterfield and Fargo exhausted their energies contending with one another, Wells served as president of a very prosperous company.

Wells Fargo. In 1852 Wells and Fargo proposed that American Express initiate a delivery service to the West. Butterfield objected, so Wells and Fargo decided to form their own company to serve Western routes. They called their new business Wells Fargo, and Wells paid particular attention to developing this service, which he could run without the annoyance of the boardroom politics that plagued American Express. Seeing the opportunity of expanding overland express service westward, Butterfield developed his own express service to the West called the Overland Mail Company, an adventuresome coach service from Saint Louis to San Francisco that both made history and lost money, despite a government contract to deliver the U.S. Mail.

Business Fortunes. The Civil War was a boon time for American Express, which delivered messages behind the lines, where other delivery services feared to go. By 1862 American Express had 890 offices and employed over fifteen hundred workers. It served ten states with some ninety-two hundred miles of delivery routes run each day. Every year during the Civil War American Express paid stock dividends of at least 20 percent, $115 per share, and in 1866 the directors declared an 80 percent stock dividend. After the war competition stiffened, and Fargo became the dominant voice among the directors as American Express began to suffer substantial losses. When American Express merged with the competing Merchants Union Express despite Wells’s protest, he was forced out of the presidency of the company and replaced by Fargo, though he remained on the board until his death. Meanwhile, Wells Fargo prospered, but Henry Wells did not. He made a series of bad investments after the war that prevented him from realizing his dream of building a college in Aurora, New York. The school was completed after his death with funding from Wells’s friend, E. B. Morgan, and named Wells College. Henry Wells died in 1878 while traveling in Scotland.