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The Great Invention. When American Express was formed 106 years ago, out of a merger between three eastern companies, its founders had no thought of handling anything but freight and money. Co-Founder Henry Wells in 1841 had pioneered express service from Manhattan to Buffalo, later began New York-Buffalo mail service by printing orange stamps and carrying letters for 6¢ v. .the 25¢ Government postal rate. As a result, the U.S. Post Office set up a nationwide 3¢ postage in 1848. American Express helped build its freight business by introducing C.O.D. shipments, but the most important American Express inventionand its No. 1 moneymakerwas the traveler's cheque (the company has never modernized the spelling). The oblong blue checks first appeared in 1891, after J. C. Fargo, the company's third president (and younger brother of Co-Founder William Fargo), returned from Europe fuming over the difficulty of cashing letters of credit. Ordered to devise a simpler system, his staff designed a check on which the buyer would write one signature at the time of purchase, another (to prove he was the legitimate owner) when he cashed it, thus devised a form of currency that could be carried everywhere and replaced if lost or stolen.
Trippers' Triumph. From the outset, U.S. tourists eagerly bought the checks. President Fargo stubbornly resisted any more truck with tourists, even though American Express had a chain of import offices in Europe. "I will not," he growled, "have gangs of trippers starting off in charabancs from in front of our offices the way they do from Thomas Cook's. We will cash their traveler's checks and give them free advice. That's all." Inevitably, the trippers triumphed.
When Reed took over, American Express was suffering from the impact of World War II, which had forced it to close 100 offices, slash its staff. Charging ahead with postwar expansion plans, he cut back executive deadwood, hired all the bright young men he could find, started sending G.I.s around Europe on tours months before V-E day. Under Reed, American Express traveler's check sales have climbed 20% a year (1955 total: about $2.3 billion), outsell competitors' checks three to one. Money orders, available at 24,330 outlets (v. 12,800 in 1943), have doubled. Loans to businesses by the company's foreign banking business have increased 220% since 1953. The company's 86-year-old foreign freight-forwarding operation has become the world's biggest, lands many of the world's oddest shipping assignments e.g., elephants from India, orchids from England.
The quietest division of American Express is its unarmed detective force. Since the company replaces millions of lost or stolen checks each year, its 100-man detective bureau has its hands full fighting forgers, pickpockets and counterfeiters, has quietly sent dozens of them to jail. In 1937, after the Government failed to jail Capone Henchman Bugs Moran, American Express nailed him for passing counterfeit traveler's checks.