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.
Peter Z. Grossman, American Express, The Unofficial History of the People Who Built the Great Financial Empire (New York: Crown, 1987);
Alden Hatch, American Express: A Century of Service (Garden City, N.Y.: Doubleday, 1950).
