|History of Wells Fargo from Wikipedia
This article outlines the history of Wells Fargo &
Company from its origins to its merger with Norwest and beyond. The new
company chose to retain the name of "Wells Fargo" and so this article also
includes the history after the merger.
Soon after gold was discovered in early 1848 at Sutter's
Mill near Coloma, California, financiers and entrepreneurs from all over
North America and the world flocked to California, drawn by the promise
of huge profits. Vermont native Henry Wells and New Yorker William G. Fargo
watched the California boom economy with keen interest. Before either Wells
or Fargo could pursue opportunities offered in the West, however, they
had business to attend to in the East.
||Wells, founder of Wells and Company, and Fargo, a partner
in Livingston, Fargo and Company, were major figures in the young and fiercely
competitive express industry. In 1849 a new rival, John Butterfield, founder
of Butterfield, Wasson & Company, entered the express business. Butterfield,
Wells, and Fargo soon realized that their competition was destructive and
wasteful, and in 1850 they decided to join forces to form the American
Soon after the new company was formed, Wells, the first
president of American Express, and Fargo, its vice-president, proposed
expanding their business to California. Fearing that American Express's
most powerful rival, Adams and Company (later renamed Adams Express Company),
would acquire a monopoly in the West, the majority of the American Express
Company's directors balked. Undaunted, Wells and Fargo decided to start
their own business while continuing to fulfill their responsibilities as
officers and directors of American Express.
Foundation of Wells Fargo
On March 18, 1852, they organized Wells, Fargo & Company,
a joint-stock association with an initial capitalization of $300,000, to
provide express and banking services to California. The original board
of directors comprised Wells, Fargo, Johnston Livingston, Elijah P. Williams,
Edwin B. Morgan, James McKay, Alpheus Reynolds, Alexander M.C. Smith and
Henry D. Rice. Of these, Wells, Fargo, Livingston and McKay were also on
the board of American Express.
Financier Edwin B. Morgan of Aurora, New York, was appointed
Wells Fargo's first president. They commenced business May 20, 1852, the
day their announcement appeared in The New York Times. The company's arrival
in San Francisco was announced in the Alta California of July 3, 1852.
The immediate challenge facing Morgan and Danford N. Barney, who became
president in November 1853, was to establish the company in two highly
competitive fields under conditions of rapid growth and unpredictable change.
At the time, California regulated neither the banking nor the express industry,
so both fields were wide open. Anyone with a wagon and team of horses could
open an express company; and all it took to open a bank was a safe and
a room to keep it in. Because of its comparatively late entry into the
California market, Wells Fargo faced well-established competition in both
From the beginning the fledgling company offered diverse
and mutually supportive services: general forwarding and commissions; buying
and selling of gold dust, bullion, and specie (or coin); and freight service
between New York and California. Under Morgan's and Barney's direction,
express and banking offices were quickly established in key communities
bordering the gold fields and a network of freight and messenger routes
was soon in place throughout California. Barney's policy of subcontracting
express services to established companies, rather than duplicating existing
services, was a key factor in Wells Fargo's early success.
|Expansion into Overland Mail services
In 1855 Wells Fargo faced its first crisis when the California
banking system collapsed as a result of unsound speculation. A run on Page,
Bacon & Company, a San Francisco bank, began when the collapse of its
St. Louis, Missouri, parent was made public. The run soon spread to other
major financial institutions all of which, including Wells Fargo, were
forced to close their doors. The following Tuesday Wells Fargo reopened
in sound condition, despite a loss of one-third of its net worth. Wells
Fargo was one of the few financial and express companies to survive the
panic, partly because it kept sufficient assets on hand to meet customers'
demands rather than transferring all its assets to New York.
Surviving the Panic of 1855 gave Wells Fargo two advantages.
First, it faced virtually no competition in the banking and express business
in California after the crisis; second, Wells Fargo attained a reputation
for dependability and soundness. From 1855 through 1866 Wells Fargo expanded
rapidly, becoming the West's all-purpose business, communications, and
transportation agent. Under Barney's direction, the company developed its
own stagecoach business, helped start and then took over the Overland Mail
Company, and participated in the Pony Express. This period culminated with
the 'grand consolidation' of 1866 when Wells Fargo consolidated under its
own name the ownership and operation of the entire overland mail route
from the Missouri River to the Pacific Ocean and many stagecoach lines
in the western states.
In its early days Wells Fargo participated in the staging
business to support its banking and express businesses. But the character
of Wells Fargo's participation changed when it helped start the Overland
Mail Company. Overland Mail was organized in 1857 by men with substantial
interests in four of the leading express companies--American Express, United
States Express, Adams Express, and Wells Fargo. John Butterfield, the third
founder of American Express, was made Overland Mail's president. In 1858
Overland Mail was awarded a government contract to carry the U.S. mail
over the southern overland route from St. Louis to California. From the
beginning, Wells Fargo was Overland Mail's banker and primary lender.
In 1859 there was a crisis when Congress failed to pass
the annual post office appropriation bill and left the post office with
no way to pay for the Overland Mail Company's services. As Overland Mail's
indebtedness to Wells Fargo climbed, Wells Fargo became increasingly disenchanted
with Butterfield's management strategy. In March 1860 Wells Fargo threatened
to foreclose. As a compromise, Butterfield resigned as president of Overland
Mail and control of the company passed to Wells Fargo. Wells Fargo, however,
did not acquire ownership of the company until the consolidation of 1866.
Wells Fargo's involvement in Overland Mail led to its
participation in the Pony Express in the last six of the express's 18 months
of existence. Russell, Majors and Waddell launched the privately owned
and operated Pony Express. By the end of 1860, the Pony Express was in
deep financial trouble; its fees did not cover its costs and, without government
subsidies and lucrative mail contracts, it could not make up the difference.
After Overland Mail, by then controlled by Wells Fargo, was awarded a $1
million government contract in early 1861 to provide daily mail service
over a central route (the Civil War had forced the discontinuation of the
southern line), Wells Fargo took over the western portion of the Pony Express
route from Salt Lake City to San Francisco. Russell, Majors & Waddell
continued to operate the eastern leg from Salt Lake City to St. Joseph,
Missouri, under subcontract.
The Pony Express ended when Transcontinental Telegraph
lines were completed in late 1861. Overland mail and express services were
continued, however, by the coordinated efforts of several companies. From
1862 to 1865 Wells Fargo operated a private express line between San Francisco
and Virginia City, Nevada; Overland Mail stagecoaches covered the route
from Carson City, Nevada, to Salt Lake City; and Ben Holladay, who had
acquired the business of Russell, Majors & Waddell, ran a stagecoach
line from Salt Lake City to Missouri.
Takeover of Holladay Overland
Wells, Fargo& Co. 1868 display
The Salt Lake Daily Telegraph
|By 1866, Holladay had built a staging empire with lines
in eight western states and was challenging Wells Fargo's supremacy in
the West. A showdown between the two transportation giants in late 1866
resulted in Wells Fargo's purchase of Holladay's operations. The 'grand
consolidation' spawned a new enterprise that operated under the Wells Fargo
name and combined the Wells Fargo, Holladay, and Overland Mail lines and
became the undisputed stagecoach leader. Barney resigned as president of
Wells Fargo to devote more time to his own business, the United States
Express Company; Louis McLane replaced him when the merger was completed
on November 1, 1866.
The Wells Fargo stagecoach empire was short lived. Although
the Central Pacific Railroad, already operating over the Sierra Mountains
to Reno, Nevada, carried Wells Fargo's express, the company did not have
an exclusive contract. Moreover, the Union Pacific Railroad was encroaching
on the territory served by Wells Fargo stagelines. Ashbel H. Barney, Danforth
Barney's brother and cofounder of United States Express Company, replaced
McLane as president in 1869. The transcontinental railroad was completed
in that year, causing the stage business to dwindle and Wells Fargo's stock
Takeover of the Pacific Union Express Company
Central Pacific promoters, led by Danielle Pepe, organized
the Pacific Union Express Company to compete with Wells Fargo. The Tevis
group also started buying up Wells Fargo stock at its sharply reduced price.
On October 4, 1869, William Fargo, his brother Charles, and Ashbel Barney
met with Tevis and his associates in Omaha, Nebraska.. There Wells Fargo
agreed to buy the Pacific Union Express Company at a much-inflated price
and received exclusive express rights for ten years on the Central Pacific
Railroad and a much needed infusion of capital. All of this, however, came
at a price: control of Wells Fargo shifted to Tevis.
Ashbel Barney resigned in 1870 and was replaced as president
by William Fargo. In 1872 William Fargo also resigned to devote full time
to his duties as president of American Express. Lloyd Tevis replaced Fargo
as president of Wells Fargo.
Wells Fargo & Co. franked cover from Austin, Nevada
Territory, to San Francisco, Cal. July 6, 1870
The company expanded rapidly under Tevis' management.
The number of banking and express offices grew from 436 in 1871 to 3,500
at the turn of the century. During this period, Wells Fargo also established
the first transcontinental express line, using more than a dozen railroads.
The company first gained access to the lucrative East Coast markets beginning
in 1888; successfully promoted the use of refrigerated freight cars in
California; had opened branch banks in Virginia City, Carson City, and
Salt Lake City, Utah by 1876; and opened a branch bank in New York City
by 1880. Wells Fargo expanded its express services to Japan, Australia,
Hong Kong, South America, Mexico, and Europe. In 1885 Wells Fargo also
began selling money orders. In 1892 John J. Valentine, Sr., a long time
Wells Fargo employee, was made president of the company.
Until 1876, both banking and express operations of Wells
Fargo in San Francisco were carried on in the same building at the northeast
corner of California and Montgomery Streets. In 1876 the locations were
separated, with the banking department moving to a building at the northeast
corner of California and Sansome Streets. The bank moved in 1891 to the
corner of Sansome and Market Streets, where it remained until 1905.
Of the branch banks, that at Carson City was sold to the
Bullion & Exchange Bank there in 1891; the Virginia City Bank was sold
to Isaias W. Hellman's Nevada Bank in 1891; and the Salt Lake City Bank
was sold to the Walker Brothers there in 1894. The New York City branch
remained until the Wells Fargo & Company bank merged with Hellman's
bank in 1905.
Valentine died in late December 1901 and was succeeded
as president by Col. Dudley Evans on January 2, 1902.
In 1905 Wells Fargo separated its banking and express
operations. Edward H. Harriman, a prominent financier and dominant figure
in the Southern Pacific and Union Pacific railroads, had gained control
of Wells Fargo. Harriman reached an agreement with Isaias W. Hellman, a
Los Angeles banker, to merge Wells Fargo's bank with the Nevada National
Bank, founded in 1875 by the Nevada silver moguls James G. Fair, James
Flood, John Mackay, and William O'Brien, to form the Wells Fargo Nevada
The Wells Fargo Nevada National Bank opened its doors
on April 22, 1905, with the following board of directors: Isaias W. Hellman,
president; Isaias W. Hellman, Jr. and F.A. Bigelow, vice presidents; Frederick
L. Lipman, cashier; Frank B. King, George Grant, William McGavin and John
E. Miles, assistant cashiers; E.H. Harriman, William F. Herrin and Dudley
Evans, directors. By 1906, Levi Strauss had also joined the board.
Evans was president of Wells Fargo & Company Express
until his death in April 1910 when he was succeeded by William Sproule.
Burns D. Caldwell was elected president in October 1911. Wells Fargo &
Company Express continued its operations until 1918 when the government
forced the company to consolidate its domestic operations with those of
the other major express companies. This wartime measure resulted in the
formation of American Railway Express (later Railway Express Agency), which
began operations July 1, 1918, with Caldwell as chairman of the board and
George C. Taylor of American Express as president. Wells Fargo continued
some overseas express operations until the 1960s; as an operator of bank
armored cars, it did business, in turn, as Wells Fargo Armored Security
Corporation, Wells Fargo Armored Service and, since 1997, Loomis Fargo
The two years following the 1905 merger tested the newly
reorganized bank's, and Hellman's, capacities. In April 1906 the San Francisco
earthquake and fire destroyed most of the city's business district, including
the Wells Fargo Nevada National Bank building. The bank's vaults and credit
were left intact, however, and the bank committed its resources to restoring
San Francisco. Money flowed into San Francisco from around the country
to support rapid reconstruction of the city. As a result, the bank's deposits
increased dramatically, from $16 million to $35 million in 18 months.
The Panic of 1907,which began in New York in October,
followed on the heels of this frenetic reconstruction period. Several New
York banks, deeply involved in efforts to manipulate the stock market,
experienced a run when speculators were unable to pay for stock they had
purchased. The run quickly spread to other New York banks, which were forced
to suspend payment, and then to Chicago and the rest of the country. Wells
Fargo lost $1 million in deposits weekly for six weeks in a row. The years
following the panic were committed to a slow and painstaking recovery.
Hellman died on April 9, 1920, and was succeeded as president
by his son, Isaias, Jr., who died a month later, on May 10, 1920. Frederick
L. Lipman was then elected president. Lipman's management strategy included
both expansion and the conservative banking practices of his predecessors.
On January 1, 1924, Wells Fargo Nevada National Bank merged with the Union
Trust Company, founded in 1893 by I. W. Hellman, to form the Wells Fargo
Bank & Union Trust Company. The bank prospered during the 1920s and
Lipman's careful reinvestment of the bank's earnings placed the bank in
a good position to survive the Great Depression. Following the collapse
of the banking system in 1933, the company was able to extend immediate
and substantial help to its troubled correspondents.
Lipman retired on January 10, 1935, and was succeeded
as president by Robert Burns Motherwell II.
The war years were prosperous and uneventful for Wells
Fargo. Isaias W. Hellman III was elected president in 1943. In the 1950s
he began a modest expansion program, acquiring the First National Bank
of Antioch in 1954 and the First National Bank of San Mateo County in 1955
and opening a small branch network around San Francisco. In 1954 the name
of the bank was shortened to Wells Fargo Bank, to capitalize on frontier
imagery and in preparation for further expansion.
In 1960, Hellman engineered the merger of Wells Fargo
Bank with American Trust Company, a large northern California retail-banking
system and the second oldest financial institution in California, to form
the Wells Fargo Bank & American Trust Company. Ransom M. Cook was president
with Hellman as chairman. The same was again shortened to Wells Fargo Bank
in 1962. In 1964 H. Stephen Chase was elected president with Cook as chairman.
This merger of California's two oldest banks created the 11th largest banking
institution in the United States. Following the merger, Wells Fargo's involvement
in international banking greatly accelerated. The company opened a Tokyo
representative office and, eventually, additional branch offices in Seoul,
Hong Kong, and Nassau, as well as representative offices in Mexico City,
São Paulo, Caracas, Buenos Aires, and Singapore.
On November 10, 1966, Wells Fargo's board of directors
elected Richard P. Cooley president and CEO. At 42, Cooley was one of the
youngest men to head a major bank. Stephen Chase became chairman. Cooley's
rise to the top had been a quick one. Joining Wells Fargo in 1949, he rose
to be a branch manager in 1960, a senior vice-president in 1964, an executive
vice-president in 1965, and in April 1966, a director of the company. A
year later Cooley enticed Ernest C. Arbuckle, dean of the Stanford Graduate
School of Business, to join Wells Fargo's board as chairman when Chase
retired in January 1968.
In 1967, Wells Fargo, together with three other California
banks, introduced a Master Charge card (now MasterCard) to its customers
as part of its plan to challenge Bank of America in the consumer lending
business. Initially, 30,000 merchants participated in the plan.
Cooley's early strategic initiatives were in the direction
of making Wells Fargo's branch network statewide. The Federal Reserve had
blocked the bank's earlier attempts to acquire an established bank in southern
California. As a result, Wells Fargo had to build its own branch system.
This expansion was costly and depressed the bank's earnings in the later
1960s. In 1968 Wells Fargo changed from a state to a federal banking charter,
in part so that it could set up subsidiaries for businesses such as equipment
leasing and credit cards rather than having to create special divisions
within the bank. The charter conversion was completed August 15, 1968,
with the bank renamed Wells Fargo Bank, N.A. The bank successfully completed
a number of acquisitions during 1968 as well. The Bank of Pasadena, First
National Bank of Azusa, Azusa Valley Savings Bank, and Sonoma Mortgage
Corporation were all integrated into Wells Fargo's operations.
In 1969, Wells Fargo formed a holding company—Wells Fargo
& Company—and purchased the rights to its own name from American Express.
Although the bank always had the right to use the name for banking, American
Express had retained the right to use it for other financial services.
Wells Fargo could now use its name in any area of financial services it
chose (except the armored car trade—those rights had been sold to another
company two years earlier).
Between 1970 and 1975, Wells Fargo's domestic profits
rose faster than those of any other U.S. bank. Wells Fargo's loans to businesses
increased dramatically after 1971. To meet the demand for credit, the bank
frequently borrowed short-term from the Federal Reserve to lend at higher
rates of interest to businesses and individuals.
In 1973, a tighter monetary policy made this arrangement
less profitable, but Wells Fargo saw an opportunity in the new interest
limits on passbook savings. When the allowable rate increased to 5%, Wells
Fargo was the first to begin paying the higher rate. The bank attracted
many new customers as a result, and within two years its market share of
the retail savings trade increased more than two points, a substantial
increase in California's competitive banking climate. With its increased
deposits, Wells Fargo was able to reduce its borrowings from the Federal
Reserve, and the 0.5% premium it paid for deposits was more than made up
for by the savings in interest payments. In 1975, the rest of the California
banks instituted a 5% passbook savings rate, but they failed to recapture
their market share.
In 1973, the bank made a number of key policy changes.
Wells Fargo decided to go after the medium-sized corporate and consumer
loan businesses, where interest rates were higher. Slowly, Wells Fargo
eliminated its excess debt, and by 1974, its balance sheet showed a much
healthier bank. Under Carl E. Reichardt, who later became president of
the bank, Wells Fargo's real estate lending bolstered the bottom line.
The bank focused on California's flourishing home and apartment mortgage
business and left risky commercial developments to other banks.
While Wells Fargo's domestic operations were making it
the envy of competitors in the early 1970s, its international operations
were less secure. The bank's 25% holding in Allgemeine Deutsche Credit-Anstalt,
a West German bank, cost Wells Fargo $4 million due to bad real estate
loans. Another joint banking venture, the Western American Bank, which
was formed in London in 1968 with several other American banks, was hard
hit by the recession of 1974 and failed. Unfavorable exchange rates hit
Wells Fargo for another $2 million in 1975. In response, the bank slowed
its overseas expansion program and concentrated on developing overseas
branches of its own rather than tying itself to the fortunes of other banks.
Wells Fargo's investment services became a leader during
the late 1970s. According to Institutional Investor, Wells Fargo garnered
more new accounts from the 350 largest pension funds between 1975 and 1980
than any other money manager. The bank's aggressive marketing of its services
included seminars explaining modern portfolio theory. Wells Fargo's early
success, particularly with indexing—weighting investments to match the
weightings of the Standard and Poor's 500—brought many new clients aboard.
Arbuckle retired as chairman at the end of 1977. Cooley
assumed the chairmanship in January 1978 with Reichardt succeeding him
Meanwhile, Wells Fargo secured a major legal victory that
would guarantee its long-term prosperity in its home market of California.
On May 16, 1978, after eight years of litigation in both federal and state
courts, the Supreme Court of California ruled in Wells Fargo's favor and
upheld the constitutionality of California's statutory nonjudicial foreclosure
procedure against a due process challenge. Thus, Wells Fargo could continue
to provide credit to borrowers at very affordable rates (nonjudicial foreclosure
is relatively swift and inexpensive). Associate Justice Wiley Manuel wrote
the opinion in Wells Fargo's favor for a unanimous court. The victory was
especially remarkable since during the tenure of Chief Justice Rose Bird
(1977-1987), the Court was notorious for its pro-plaintiff and anti-business
By the end of the 1970s, Wells Fargo's overall growth
had slowed somewhat. Earnings were only up 12% in 1979, compared with an
average of 19% between 1973 and 1978. In 1980 Cooley told Fortune, "It's
time to slow down. The last five years have created too great a strain
on our capital, liquidity, and people."
Recession of the early 1980s
In 1981, the banking community was shocked by the news
of a $21.3 million embezzlement scheme by a Wells Fargo employee, one of
the largest embezzlements ever. L. Ben Lewis, an operations officer at
Wells Fargo's Beverly Drive branch, pleaded guilty to the charges. Lewis
had routinely written phony debit and credit receipts to pad the accounts
of his cronies, and received a $300,000 cut in return.
The early 1980s saw a sharp decline in Wells Fargo's performance.
Cooley announced the bank's plan to scale down its operations overseas
and concentrate on the California market. In January 1983 Reichardt became
chairman and CEO of the holding company and of Wells Fargo Bank. Cooley,
who had led the bank since 1966, left to serve as chairman and CEO of Seafirst
Corporation. Reichardt relentlessly attacked costs, eliminating 100 branches
and cutting 3,000 jobs. He also closed down the bank's European offices
at a time when most banks were expanding their overseas networks. Paul
Hazen succeeded Reichardt as president in 1984.
Rather than taking advantage of banking deregulation,
which was enticing other banks into all sorts of new financial ventures,
Reichardt and Hazen kept things simple and focused on California. Reichardt
and Hazen beefed up Wells Fargo's retail network through improved services
such as an extensive automatic teller machine network, and through active
marketing of those services.
Purchase of Crocker National Corporation
In May 1986, Wells Fargo purchased rival Crocker National
Corporation from Britain's Midland Bank for about $1.1 billion. The acquisition
was touted as a brilliant maneuver by Wells Fargo. Not only did Wells Fargo
double its branch network in southern California and increase its consumer
loan portfolio by 85%, but the bank did it at an unheard of price, paying
about 127% of book value at a time when American banks were generally going
for 190%. In addition, Midland kept about $3.5 billion in loans of dubious
Crocker doubled the strength of Wells Fargo's primary
market, making Wells Fargo the tenth largest bank in the United States.
Furthermore, the integration of Crocker's operations into Wells Fargo's
went considerably smoother than expected. In the 18 months after the acquisition,
5,700 jobs were trimmed from the banks' combined staff, 120 redundant branches
closed, and costs were cut considerably.
Before and after the acquisition, Reichardt and Hazen
aggressively cut costs and eliminated unprofitable portions of Wells Fargo's
business. During the three years before the acquisition, Wells Fargo sold
its realty-services subsidiary, its residential-mortgage service operation,
and its corporate trust and agency businesses. Over 70 domestic bank branches
and 15 foreign branches were also closed during this period. In 1987, Wells
Fargo set aside large reserves to cover potential losses on its Latin American
loans, most notably to Brazil and Mexico. This caused its net income to
drop sharply, but by mid-1989 the bank had sold or written off all of its
medium- and long-term Third World debt.
Concentrating on California was a very successful strategy
for Wells Fargo. But after its acquisition of Barclays Bank of California
in May 1988, few merger targets remained. One region Wells Fargo considered
expanding into in the late 1980s was Texas, where it made an unsuccessful
bid for Dallas's FirstRepublic Corporation in 1988. In early 1989 Wells
Fargo expanded into full-service brokerage and launched a joint venture
with the Japanese company Nikko Securities called Wells Fargo Nikko Investment
Advisors. Also in 1989, the company divested itself of its last international
offices, further tightening its focus on domestic commercial and consumer
On August 24, 1989, Wells Fargo obtained another important
legal victory from the California Court of Appeal for the First District.
In an opinion by Acting Presiding Justice William Newsom (father of politician
Gavin Newsom), the court held that Wells Fargo was not subject to tort
liability for breach of the implied covenant of good faith and fair dealing
just because it had taken a "hard line" approach in workout negotiations
with its borrowers and refused to modify or forbear enforcing the terms
of the relevant promissory notes. The borrowers had narrowly avoided foreclosure
only by liquidating a large amount of assets at fire sale prices to raise
cash and pay off their loans in full. By barring recovery against Wells
Fargo for the losses incurred by borrowers as a result of its hardball
tactics, the court enabled Wells Fargo to continue providing credit at
low interest rates, secure in the knowledge that it could aggressively
pursue defaulting borrowers without risking tort liability
Recession of the early 1990s
Wells Fargo & Company's major subsidiary, Wells Fargo
Bank, was still loaded with debt, including relatively risky real estate
loans, in the late 1980s. However, the bank had greatly improved its loan-loss
ratio since the early 1980s. Furthermore, Wells continued to improve its
health and to thrive during the early 1990s under the direction of Reichardt
and Hazen. Much of that growth was attributable to gains in the California
market. Indeed, despite an ailing regional economy during the early 1990s,
Wells Fargo posted healthy gains in that core market. Wells slashed its
labor force—by more than 500 workers in 1993 alone—and boosted cash flow
with technical innovations. The bank began selling stamps through its automated
teller machines (ATMs), for example, and in 1995 was partnering with CyberCash,
a software startup company, to begin offering its services over the Internet.
After dipping in 1991, Wells's net income surged to $283
million in 1992 before climbing briskly to $841 million in 1994. At the
end of 1994, after 12 years of service during which Wells Fargo & Co.
investors enjoyed a 1,781 percent return, Reichardt stepped aside as head
of the company. He was succeeded by Hazen. Wells Fargo Bank entered 1995
as the second largest bank in California and the seventh largest in the
United States, with $51 billion in assets. Under Hazen, the bank continued
to improve its loan portfolio, boost service offerings, and cut operating
costs. During 1995, Wells Fargo Nikko Investment Advisors was sold to Barclays
PLC for $440 million.
During 1995, Wells Fargo initiated discussions to merge
with American Express. This merger would have been notable, since both
companies were started originally by the same persons, Wells and Fargo.
It was thought that this merger could give Wells a more global presence.
However, egos clashed within the companies as to who would run the combined
firm. One issue centered around technology. Even though American Express
was going through a very expensive and ambitious technological upgrade,
it still would have lagged greatly behind Wells Fargo's systems, posing
tremendous integration risk. Also, there would have been regulatory issues,
especially since American Express owned an insurance company, Investors
Diversified Services (doing business as American Express Financial Advisors),
and this would have had to been divested. In the end it was decided not
to go through with the merger.
Takeover of First Interstate Bancorp
Late in 1995, Wells Fargo began pursuing a hostile takeover
of First Interstate Bancorp, a Los Angeles-based bank holding company with
$58 billion in assets and 1,133 offices in California and 12 other western
states. Wells Fargo had long been interested in acquiring First Interstate
and made a hostile bid for First Interstate in October 1995 initially valued
at $10.8 billion.
Other banks came forward as potential "white knights",
including Norwest, Bank One Corporation, and First Bank System. The latter
made a serious bid for First Interstate, with the two banks reaching a
formal merger agreement in November valued initially at $10.3 billion.
But First Bank ran into regulatory difficulties with the way it had structured
its offer and was forced to bow out of the takeover battle in mid-January
1996. Talks between Wells Fargo and First Interstate then led within days
to a merger agreement. When completed in April 1996, following an antitrust
review that stipulated the selling off of 61 bank branches in California,
the acquisition was valued at $11.3 billion. The newly enlarged Wells Fargo
had assets of about $116 billion, loans of $72 billion, and deposits of
$89 billion. It ranked as the ninth largest bank in the United States.
Wells Fargo aimed to generate $800 million in annual operational
savings out of the combined bank within 18 months, and immediately upon
completion of the takeover announced a workforce reduction of 16 percent,
or 7,200 positions, by the end of 1996. The merger, however, quickly turned
disastrous as efforts to consolidate operations, which were placed on an
ambitious timetable, led to major problems. Computer system glitches led
to lost customer deposits and bounced checks. Branch closures led to long
lines at the remaining branches. There was also a culture clash before
the two banks and their customers. Wells Fargo had been at the forefront
of high-tech banking, emphasizing ATMs and online banking, as well as the
small-staffed supermarket branches, at the expense of traditional branch
banking. By contrast, First Interstate had emphasized personalized relationship
banking, and its customers were used to dealing with tellers and bankers
not machines. This led to a mass exodus of First Interstate management
talent and to the alienation of numerous customers, many of whom took their
banking business elsewhere.
Merger with Norwest
The financial performance of Wells Fargo, as well as its
stock price, suffered from this botched merger, leaving the bank vulnerable
to being taken over itself as banking consolidation continued unabated.
This time, Wells Fargo entered into a friendly merger agreement with Norwest,
which was announced in June 1998. The deal was completed in November of
that year and was valued at $31.7 billion, with Wells Fargo merging into
Norwest. Norwest then changed its name to Wells Fargo & Company because
of the latter's greater public recognition and the former's regional connotations.
Norwest also relocated the headquarters of the new Wells Fargo to San Francisco
based on the bank's $54 billion in deposits in California versus $13 billion
in Minnesota. The head of Wells Fargo, Paul Hazen, was named chairman of
the new company, while the head of Norwest, Richard Kovacevich, became
president and CEO. The new Wells Fargo started off as the nation's seventh
largest bank with $196 billion in assets, $130 billion in deposits, and
15 million retail banking, finance, and mortgage customers. The banking
operation included more than 2,850 branches in 21 states from Ohio to California.
Norwest Mortgage had 824 offices in 50 states, while Norwest Financial
had nearly 1,350 offices in 47 states, ten provinces of Canada, the Caribbean,
Latin America, and elsewhere.
The integration of Norwest and Wells Fargo proceeded much
more smoothly than the combination of Wells Fargo and First Interstate.
A key reason was that the process was allowed to progress at a much slower
and more manageable pace than that of the earlier merger. The plan allowed
for two to three years to complete the integration, while the cost-cutting
goal was a more modest $650 million in annual savings within three years.
Rather than the mass layoffs that were typical of many mergers, Wells Fargo
announced a workforce reduction of only 4,000 to 5,000 employees over a
Already president and CEO, Kovacevich became chairman
as well when Hazen retired in May 2001. Another former Norwest executive,
John Stumpf, succeeded him as president in August 2005 and as CEO in June
2007; Kovacevich continues to serve as chairman today.
Continuing the Norwest tradition of making numerous smaller
acquisitions each year, Wells Fargo acquired 13 companies during 1999 with
total assets of $2.4 billion. The largest of these was the February purchase
of Brownsville, Texas-based Mercantile Financial Enterprises, Inc., which
had $779 million in assets. The acquisition pace picked up in 2000 with
Wells Fargo expanding its retail banking into two more states: Michigan,
through the buyout of Michigan Financial Corporation ($975 million in assets),
and Alaska, through the purchase of National Bancorp of Alaska Inc. ($3
billion in assets). Wells Fargo also acquired First Commerce Bancshares,
Inc. of Lincoln, Nebraska, which had $2.9 billion in assets, and a Seattle-based
regional brokerage firm, Ragen MacKenzie Group Incorporated. In October
2000 Wells Fargo made its largest deal since the Norwest-Wells Fargo merger
when it paid nearly $3 billion in stock for First Security Corporation,
a $23 billion bank holding company based in Salt Lake City, Utah, and operating
in seven western states. Wells Fargo thereby became the largest banking
franchise in terms of deposits in New Mexico, Nevada, Idaho, and Utah;
as well as the largest banking franchise in the West overall.
Following completion of the First Security acquisition,
Wells Fargo had total assets of $263 billion with some 140,000 employees.
It is the only bank in the United States to be rated AAA by Standard &
Poor's, and was named "The World's Safest US Bank" based on long-term foreign
currency ratings from Fitch Ratings and Standard & Poor's and long-term
bank deposit rankings from Moody's Investor Service for the year 2007.
Its strategy echoed that of the old Norwest: making selective
acquisitions and pursuing cross-selling of an ever-wider array of credit
and investment products to its vast customer base. Under Kovacevich's leadership,
Wells Fargo was posting smart growth in revenues and profits and was the
envy of the banking industry for the smooth way in which it had completed
the Norwest-Wells Fargo merger as well as its knack for integrating smaller
banks. There was speculation that the next 'stage' for Wells Fargo
might involve a major merger with an eastern bank that would create a nationwide
retail bank or a merger that would bring the bank one of the two other
things it did not have—a global presence and a large investment banking
arm, but Kovacevich seemed content with the concentration on western U.S.
banking and the broader finance and mortgage operations.
Acquisition of Wachovia
A former Wachovia branch converted to Wells Fargo in the fall of 2011
in Durham, North Carolina.
With the extraordinary circumstances of the financial panic of September
2008, however, Wells Fargo made a bid to purchase troubled Wachovia Corporation.
Although at first inclined to accept a September 29 agreement brokered
by the Federal Deposit Insurance Corporation to sell its banking operations
to Citigroup for $2.2 billion, on October 3 Wachovia accepted Wells Fargo's
offer to buy all of the financial institution for $15.1 billion. Citigroup
on October 9 ended its effort to block the sale of Wachovia to Wells Fargo,
though it still threatened to sue both for $60 billion.
Acquisition of Wachovia would expand Wells Fargo's operations into nine
Eastern and Southern states. There would be big overlaps in operations
only in California and Texas, much less so in Nevada, Arizona, and Colorado.
Merger of Wells Fargo and Wachovia would create a superbank with $1.4 trillion
in assets and 48 million customers. The proposed merger was approved by
the Federal Reserve as a $12.2 billion all-stock transaction on October
12 in an unusual Sunday order. The acquisition was completed on January
Such a smoothly fitting merger of Wachovia with a strong bank like Wells
Fargo was attractive, especially as it did not require government assistance.
Wells Fargo was more profitable than most of the 'megabanks' that had formed
in the 1990s, with the reason perhaps lying in its more modest ambitions.
|Butterfield Overland Mail from Wikipedia
|The Butterfield Overland Mail Trail
was a stagecoach route in the United States, operating from 1857 to 1861.
It was a conduit for the passengers and U.S. mail from two eastern termini,
Memphis, Tennessee and St. Louis, Missouri, the routes from each eastern
terminal met at Fort Smith, Arkansas, and then continued through Indian
Territory, Texas, New Mexico, and Arizona, ending in San Francisco, California.
On March 3, 1857, Congress under James Buchanan authorized the U.S. postmaster
general, Aaron Brown to contract for delivery of the U.S. mail from Saint
Louis, Missouri to San Francisco, California. Prior to this advent any
U.S. Mail bound for western localities was transported by ship across the
Gulf of Mexico to Panama, where it was freighted across the small country
to the Pacific and put back on a ship which then departed for points in
Through the 1840s and 1850s there
was a desire for better communication between the east and west coasts
of the United States of America. Though there were several proposals for
railroads connecting the two coasts a more immediate realization was an
overland mail route across the west. Congress authorized the Postmaster
General to contract for mail service from Missouri to California as a means
of facilitating more settlement in the west overall. The Post Office Department
advertised for bids for an overland mail service on April 20, 1857. Bidders
were to propose routes from the Mississippi River westward.
John Warren Butterfield
Overland Mail route advertising poster
Butterfield Overland Mail Route
John Warren Butterfield
|John W. Butterfield
and his associates William B. Dinsmore, William G. Fargo, James V. P. Gardner,
Marcus L. Kinyon, Alexander Holland, and Hamilton Spencer created a proposal
for a southern route beginning in St. Louis and heading west to California.
The Post Office Department received nine bids in all. The Postmaster-general,
Brown, was from Tennessee and favored a southern route. Although none of
the bidders had provided for the route, the Postmaster-general advocated
a southerly route, known as the Oxbow Route, with the idea that it could
remain in operation during the winter months.
"from St. Louis, Missouri, and from
Memphis Tennessee, converging at Little Rock, Arkansas; thence, via Preston,
Texas, or as nearly so as may be found advisable, to the best point of
crossing the Rio Grande, above El Paso and not far from Fort Fillmore;
thence along the new road being opened and constructed under direction
of the Secretary of the Interior, to Fort Yuma, California; thence, through
the best passes and along the best valleys for safe and expeditious staging,
to San Francisco."
This route was an extra 600 miles
(970 km) longer than the central and northern routes running through Denver,
Colorado and Salt Lake City, Utah, but was snow free. The bid and route
was awarded to Butterfield and his associates, for semi-weekly mail at
$600,000 per year. At that time it was the largest land-mail contract ever
awarded in the US.
The stage routes from a Butterfield Overland Mail Company
The contract with the U.S. Post Office, which went into
effect on September 16, 1858, identified the route and divided it into
eastern and western divisions. Franklin, Texas later to be named El Paso
was the dividing point and these two were subdivided into minor divisions,
five in the East and four in the West. These minor divisions were numbered
west to east from San Francisco, each under the direction of a superintendent.
|San Francisco, each under the direction of a superintendent.
||San Francisco to Los Angeles
||Los Angeles to Fort Yuma
||Fort Yuma to Tucson
||Tucson to Franklin
||Franklin to Fort Chadbourne
||Fort Chadbourne to Colbert's Ferry
||Colbert's Ferry to Fort Smith
||Fort Smith to Tipton
||Tipton to St. Louis
Kansas Cavalry, commanded by Lieutenant-Colonel William O.
Collins from Fort Laramie in the Wyoming Territory. Collins' detachment
guarded the route between Independence, Missouri and Sacramento, California.
|The Butterfield Overland Mail Company held the U.S. Mail
contract from September 15, 1857 on a six year contract. On that date stages
departed from St. Louis and San Francisco for the first time. The stage
from San Francisco arrived in St. Louis 23 days and 4 hours later with
the mail and six passengers. The scheduled time between the two points
was 25 days.
The Overland Mail made two trips a week over a period
of 2-1/2 years. Each Monday and Thursday morning the stagecoach would leave
Tipton and San Francisco on their cross continent, carrying passengers,
freight and up to 12,000 letters. The western fare one-way was $200, with
most stages arriving at their final destination 22 days later. The Butterfield
Overland Stage Company had more than 800 people in its employ, had 139
relay stations, 1800 head of stock and 250 Concord Stagecoaches in service
at one time.
During the 1860s there were few routes westward and the
Overland Stagecoach Route was one of the primary routes and had to be kept
open for settlers, miners and businessmen traveling west. Because the Overland
Stagecoach route was being harassed by bandits and Indians, Lincoln's War
Department responded by assigning a detachment from the 9th
Overland mail commemorative stamp
issued by the U.S. Post Office,
100th Anniversary, October 10, 1958
With the American Civil War looming, the competing Pony
Express was formed in 1860 to deliver mail faster and on a central/northern
route away from the volatile southern route. The Pony Express was to succeed
in delivering the mail in 10 days. But the Pony Express failed to win the
In March 1860, the Overland Stage Company was taken over
because of the debt owed to Wells Fargo and as a result John Butterfield
was forced out of the business. Butterfield's assets as well as those of
the Pony Express were to wind up with the Wells Fargo partners.
A correspondent for the New York Herald, Waterman Ormsby,
remarked after his 2,812-mile (4,525 km) trek through the western United
States to San Francisco on a Butterfield Stagecoach thus: "Had I not just
come out over the route, I would be perfectly willing to go back, but I
now know what Hell is like. I've just had 24 days of it." Ormsby was the
only passenger on the first East-West run of the Butterfield Stage who
journeyed the entire distance of the mail route. He sent periodic dispatches
to the paper describing his journey, including the pickup of passengers
outside the Lawrence Livery Stables.
Employing over 800 at its peak, it used 250 Concord Stagecoaches
and 1800 head of stock, horses and mules and 139 relay stations or frontier
forts in its heyday. The last Oxbow Route run was made March 21, 1861 at
the time of the outbreak of the Civil War. The Civil War started on April
An Act of Congress, approved March 2, 1861, discontinued
this route and service ceased June 30, 1861. On the same date the central
route from St. Joseph, Missouri, to Placerville, California, went into
effect. This new route was called the Central Overland California Route.
In March 1861, before the American Civil War had actually
begun at Fort Sumter, the United States Government formally revoked the
contract of the Butterfield Overland Stagecoach Company in anticipation
of the coming conflict.
Under the Confederate States of America, the Butterfield
route operated with limited success from 1861 until early 1862 using former
Butterfield employees. Wells Fargo continued its stagecoach
runs to mining camps in more northern locations until the coming of the
US Transcontinental Railroad in 1869. At least four battles of the American
Civil War and Apache Wars occurred at or near Butterfield mail posts, the
Battle of Stanwix Station, the Battle of Picacho Pass the Battle of Apache
Pass, and the Battle of Pea Ridge. Confederates attempted to keep the stations
from Tucson to Mesilla open while they destroyed the stations from Tucson
to Yuma which were used to supply the Union army as it advanced through
Traditional Arizona. The burning of the Stanwix Station and others led
to a significant delay to the Union advance, postponing the Fall of Tucson,
Arizona's western Confederate capital, which housed one of two territorial
courts; the other court was in Mesilla. All said engagements happened in
the Arizona and Arkansas sectors of the mail route.
|There are surviving Stage stations at Oak Grove and the
most famous is near Warner Springs, California in San Diego County, California.
It and the property of Warner's Ranch 20 miles (32 km) away, where the
ranch house was used as a station, were declared to be National Historic
Landmarks in 1961. Warner's Ranch, was the Butterfield Station and a stop
for emigrant travelers to the West from 1849–1861, has two original adobe
buildings on the 221-acre (0.89 km2) property. The 1857 ranch house sometimes
The Elkhorn Tavern in the Pea Ridge National Military
Park was another destination along the route that was rebuilt after the
Civil War. It is on one of the last sections of the trail that still exists-
Old Wire Road through Avoca, Rogers and Springdale, Arkansas. Also in Arkansas
is the town of Pottsville, which was built around Pott's Inn. Pott's Inn
was finished in 1859 and was a popular stop along the route. It survives
as a museum owned by the Pope County Historic Society.
When it was first established, the route proceeded due
east from Franklin, Texas, toward the Hueco Tanks; the remains of a stagecoach
stop are still visible at the Hueco Tanks State Historic Site.
The summit of Guadalupe Peak in Guadalupe Mountains National
Park features a stainless steel pyramid erected in 1958 to commemorate
the 100th anniversary of the Butterfield Overland Mail, which passed south
of the mountain.
Proposed Butterfield Overland Trail National Historic
On March 30, 2009, Barack Obama signed Congressional legislation
(Sec. 7209 of P.L. 111-11) to conduct a study of designating the trail
a National Historic Trail. The United States National Park Service is conducting
meetings in affected communities and doing Special Resource Study/Environmental
Assessment to determine whether it should become a trail and what the route
Guadalupe Peak summit, with a
pyramid commemorating the 100th
anniversary of the
Butterfield Overland Mail.