Merrill, Charles

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Merrill, Charles

Merrill Lynch & Co., Inc.


As cofounder of Merrill, Lynch & Co. in 1914, Charles E. Merrill launched a Wall Street dynasty that would long outlive him. Building on the slogan "Bring Wall Street to Main Street," he designed his business around middle-class investors, not stock exchange insiders. By the time of his death in 1956, his firm had offices in 106 cities across North America, and it has continued to grow ever since, through good times and bad.

Personal Life

Charles E. Merrill was born on October 19, 1885 in Green Cove Springs, Florida, the son of Dr. Charles and Octavia Wilson Merrill. His father, a local physician, also owned a drug store. As a boy, Merrill worked in his father's drug store and had a paper route. Merrill attended a preparatory school affiliated with Stetson University, and later was sent on a partial athletic scholarship to Worcester Academy in Massachusetts. He attended Amherst College in Massachusetts from 1904 to 1906. He left Amherst without graduating and returned to Florida, where he dabbled in newspaper journalism at West Palm Beach's Tropical Sun. Later in life, he commented that that job provided him with "the best training I ever had; I learned human nature."

After one year of law school at the University of Michigan, Merrill abandoned plans for a legal career and went to Mississippi to play baseball during the summer of 1907 for a minor league team. When the season ended, he moved to New York City to look for work. His first job was in the office of the Patchogue Plymouth Mills in Patchogue, New York. Here, Merrill acquired what "turned out to be the equivalent of a university course in general, and credit, finance, cost accounting, and administration, in particular." This training would be invaluable to his future success.

Charles Merrill married three times: to Eliza Church, with whom he had a son and a daughter, in 1912; to Helen Ingram, with whom he had a son, in 1925 (they divorced in 1937); and to Kenta Des More, a marriage that lasted from 1939 to their divorce in 1952. Merrill spent his last years at his home on Merrill's Landing in Palm Beach, Florida, and died on October 6, 1956.

Career Details

The skills Merrill learned at his early jobs enabled him to become one of the most innovative leaders in the field of financial services. With a sound understanding of business practices that he obtained during his two years with Patchogue Mills, he went on to a job on Wall Street. Merrill joined George H. Burr & Company in 1909. The company's owner had heard of Merrill's abilities and wanted the young man to take charge of Burr's newly created bond department. Merrill promptly hired Edmund Lynch, a Johns Hopkins University graduate whom he had met at the 23rd Street YMCA, to handle sales.

Merrill's strategy for attracting new customers was to use direct mail solicitations. He concentrated on informative and accurate information, rather than the exaggerated claims and misleading statements that were the norm at the time. This emphasis on honesty was to remain one of Merrill's chief concerns throughout his career. Clear, honest information would appeal to a broad customer base, he reasoned, and "having thousands of customers scattered throughout the United States is infinitely preferable to being dependent upon the fluctuating buying power of a smaller and perhaps on the whole wealthier group of investors in any one section."

Under Merrill's leadership, Burr's bond department quickly became a success. Soon the company expanded into underwriting (guaranteeing) equities. In 1912, the company sponsored a $2 million stock offering in the Kresge chain stores. Chain stores were a new concept at the time, and this project began Merrill's career-long involvement with this retail innovation.

In 1913, Merrill left Burr to become sales manager at Eastman, Dillon & Company and a year later founded his own small securities firm, Charles E. Merrill & Company. Within six months, he had taken on Edmund Lynch as a partner, and Merrill, Lynch was born. The partners began by underwriting two chain stores, McCrory Stores and Kresge, an account Merrill lured away from Burr. With the public receptive to buying stock in this emerging business, Merrill soon made his first fortune. He accepted stock warrants as part of his fee and sold these when they increased in value.

World War I had broken out by this time, and Merrill joined the U.S. Army as a first lieutenant in the air corps. After the war, Merrill returned to his firm to oversee its period of greatest expansion. The American economy was booming in the 1920s. Many Americans had bought war bonds, and liked the investing habit; they were now ready to expand to corporate ventures. Merrill's emphasis on straight advice for a broad range of middle-class customers was well-suited to this new business climate. Merrill, Lynch grew rapidly. In 1919, Merrill hired the first bond saleswoman on Wall Street, Annie Grimes, and in 1924 he expanded the company's office hours, opening early and closing late, to better serve customers.

Merrill, Lynch continued to focus on the expanding chain store industry. About half of the company's underwritings in the 1920s were retailers such as J.C. Penney, National Tea, Kresge, and McCrory. In 1921, the company entered the movie business when it took over the studio Pathé Exchange. Merrill, Lynch later sold the studio to Cecil B. deMille and Joseph Kennedy (father of the future president). With the profit from the sale of Pathé Exchange, the company acquired the southern California food chain Safeway Stores. Merrill subsequently built up and expanded Safeway, merging it with another western chain. Merrill next founded Family Circle magazine, the first magazine distributed through supermarkets.

As the American economy continued to boom through the 1920s, Merrill grew increasingly concerned. In 1928, over a year before the infamous stock market crash that sent the country into the Great Depression, he sent a letter to customers recommending they get out of debt. He persuaded his partner to reduce the company's vulnerability in the event of a sharp decline. When the stock market crashed in October 1929, Merrill, Lynch survived. Merrill became highly respected for his ability to foresee market trends.

In January 1930, Merrill, Lynch left the brokerage business and turned over its accounts to E.A. Pierce and Company. The firm then focused on underwriting and individual banking, specializing in chain stores. By 1931, Merrill had built Safeway to the third largest food chain in the country. He was also its largest stockholder. Growth continued through the decade, but then, on a vacation trip in 1938, Edmund Lynch died unexpectedly. Without his partner, Merrill had to reexamine his business focus. In 1940, he went back into the brokerage business and merged Merrill, Lynch with E. A. Pierce and Company. The next year, another merger created Merrill Lynch, Pierce, Fenner, and Beane, the world's largest brokerage house.

During the 1940s, Merrill was at the forefront of change in the investment industry. He coined the phrase "Bring Wall Street to Main Street" in 1941 to attract small investors to the stock market. He printed ads and pamphlets with his characteristic honest information, and insisted on professionalism among his own employees. He provided business education for his employees and paid them a straight salary rather than commissions. These strategies boosted public confidence in the company, and enabled Merrill Lynch to continue its astronomical growth.

After suffering a heart attack in 1944, Merrill withdrew from active management of the firm. But he continued to direct strategy and long-term planning for the company. With partner Win Smith, Merrill instituted additional changes. He recruited younger, better-educated brokers and provided them with training in accounting and commercial banking. He published the booklets "Hedging: Insurance Policy or Lottery Ticket" and "How to Read a Financial Report," and ran informative ads in the country's leading newspapers.

In 1954, the New York Stock Exchange launched a new plan for moderate-income individuals who wished to make small, regular investments in the stock market. Merrill Lynch became the largest institutional supporter of this Monthly Investment Plan (MIP). After one year, Merrill Lynch had almost half of all MIP accounts, and within a few years the firm maintained the vast majority of MIP accounts. By the time he died in 1956, Merrill's firm had 107 partners in 106 cities, employed over 4,600 people, and handled almost 300,000 active customer accounts. The firm then became Merrill, Lynch, Pierce, Fenner and Smith and continues to be the world's biggest brokerage.

Social and Economic Impact

Merrill's innovations in the field of financial services led to far-reaching changes both in the way Americans invested and in the way they spent money. Before Merrill established his brokerage firm, stock market investments were only for the elite or the unscrupulous. Average Americans had no idea of how the stock market worked, and they distrusted Wall Street—with good reason. Many brokerage houses kept the "best" information only for their wealthiest customers, and tried to lure others with exaggerated claims and deceptive promises of profits. Merrill, however, provided accurate figures and honest information tailored to the needs of average Americans. One of his first acts when he reentered the brokerage field in the 1940s was to issue a pamphlet that stated "The interests of our customers MUST come first."

Chronology: Charles Merrill

1885: Born.

1914: Established Merrill, Lynch and Company.

1922: Assumed management of bond department at George H. Burr and Company.

1926: Organized Safeway Stores.

1930: Left brokerage business to focus on underwriting chain stores.

1932: Founded Family Circle magazine.

1940: Merged with E. A. Pierce and Company.

1941: Merged with Fenner and Beane.

1946: Published booklet "How to Read a Financial Report."

1954: Supported New York Stock Exchange Monthly Investment Plan.

1956: Died at Southampton, NY home.

Merrill Lynch became a leader in the dissemination of investment information. The company published a biweekly magazine, Investor's Reader, and was the first to make full public disclosures of its operations and holdings, as well as the investments of its partners. As Martin Mayer wrote in Wall Street: Men and Money, "Merrill brought in the public [to Wall Street] not as lambs to be fleeced but as partners in the benefits."

New Deal legislation also affected the public perception of Wall Street. During the 1930s, the federal government created the Securities and Exchange Commission to monitor the stock brokerage industry. New laws imposed fines and jail terms on those convicted of financial fraud. Merrill wholeheartedly supported these reforms and was instrumental in influencing other brokerage houses to adopt his firm's direct practices.

The rapid growth of chain stores, in which Merrill was instrumental, also profoundly affected the American economy. Before the introduction of these giant chains, most Americans shopped at small, mom-and-pop style stores that operated with a small volume and charged higher prices. Since chains could operate on an economy of scale, though, they could offer a greater selection of goods at lower prices. The growth of chains became such a threat to smaller retailers that the California legislature passed a tax on chain stores which would have absorbed about 20 percent of Safeway's net income. Safeway management, confident that consumers wanted the better prices and selection that chains could offer, urged that the issue be put to a popular vote. In a 1936 statewide referendum, voters in California repealed the tax. The message was clear: consumers wanted chain stores. Merrill later remarked, "If ever I get to heaven, it will be because I helped lower the price of milk by a penny a quart in Los Angeles."

Merrill used a substantial part of his wealth to further the principles by which he had made his fortune. In 1945 he created the Merrill Foundation for the Advancement of Investment Knowledge, which awarded grants to institutions such as Massachusetts Institute of Technology, Brookings Institute, and the Wharton School of Finance. He donated 95 percent of his $25 million estate to churches, hospitals, and colleges. A large portion of this estate supported colleges and universities in the South that served African American populations. In 1951, he donated his 16-acre estate in Southampton, Long Island to Amherst College. The estate became the Merrill Center of Economics. In 1953, Merrill endowed a chair of medicine at Harvard university in honor of heart specialist Dr. Samuel A. Levine, who had treated Merrill for his heart condition.

In 1947, Merrill was named as the only representative from the securities industry in a poll of 50 outstanding business leaders. He received an honorary M.A. degree from Amherst College in 1933, honorary degrees from the University of Michigan in 1945, John B. Stetson University in 1946, Amherst College in 1948, Kenyon College in 1949, and a degree from New York University in 1950.

Sources of Information

Contact at: Merrill Lynch & Co., Inc.
World Financial Center, North Tower
250 Vesey St.
New York, NY 10281-1332
Business Phone: (212)449-1000


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Merrill, Charles E., Jr. The Checkbook: The Politics and Ethics of Foundation Philanthropy. Boston: Oelgeschlager, Gunn & Hain, 1986.

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Schweikart, Larry, ed. "Banking and Finance, 1913-1989." In Encyclopedia of American Business History and Biography. New York: Facts on File, 1990.

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