Corporations: Oil, Vinegar & Sugar

Ever since it invented the traveler’s check in 1891, American Express Co. has been concerned with the problems of U.S. tourists. For the more than 1,500,000 Americans who travel abroad annually—the total is up 20% this year —its 408 offices around the world serve as mailing address, bank, guide, interpreter, travel agent and meeting place. They also take on such tasks as searching for daughters who have not written home and getting quick attention for those who become ill. Best known for its virtually loss-proof checks—which have become one of the world’s most trusted and convertible currencies—American Express employs 200 sleuths who roam the world policing it against counterfeiting and other types of fraud.

Sign & Fly. The sleuths, alas, could not protect American Express against one of the biggest business frauds of all time—the Great Salad-Oil Scandal. As a result, the company today is preoccupied with a problem of its own: satisfying the creditors of bankrupt American Express Warehousing, Ltd., a minor subsidiary that was conned into issuing warehouse receipts for the nonexistent salad oil of Commodities Speculator Anthony De Angelis, who is now appealing his recent 20-year jail sentence. Although American Express is not legally responsible for some $100 million in claims on its subsidiary, it has offered creditors $60 million in addition to a $20 million insurance settlement. Reason: depending heavily on public confidence in its traveler’s checks and credit cards, the company cannot afford to give the impression that it is shirking its financial obligations.

The scandal and financial burden might have been the downfall of a lesser company, but Amexco has proved that it can thrive despite adversity. Stung into greater efforts by the salad-oil scandal, it used imaginative promotion to boost the volume of its traveler’s checks to about $2.5 billion last year, 16% higher than in 1963. Careful weeding of unreliable credit card holders and such innovations as the “Sign & Fly” program, which enables air travelers to fly on credit, lifted the American Express credit card operation out of the red (it lost $10 million between 1958 and 1962) and pushed it ahead of Diners’ Club and Carte Blanche. It is now the world’s leading credit card (1964 billings: $342 million), accepted in 122,208 establishments that range from Tokyo restaurants to Paris perfumeries. Amexco boosted its 1964 revenues 17.7% to a record $118 million and its earnings 11.3% to $12.5 million. American Express stock, which plummeted from $62 to $35 within a month after the scandal broke, last week was up over $63.

Spreading Out. Most of the credit for this resiliency belongs to Howard L. Clark, 49, Amexco’s relaxed, forthright president. Clark joined the company in 1945, fresh from wartime duty as a lawyer in the Navy (where he worked with a fellow lieutenant named Richard Nixon). Hired as assistant to President Ralph Reed, Clark watched and learned the business over Reed’s shoulder, developed a strong group of young executives, succeeded his boss in 1960. He promptly began reorganizing American Express, giving existing divisions more autonomy and, most important, spreading the company into many new fields.

In partnership with Hertz, Clark has helped build Hertz American Express International into the biggest and most profitable car and truck rental unit outside the U.S. In 1963, American Express acquired full ownership of Wells Fargo, increased its fleet of armored trucks to more than 200, making it second only to Brinks in its field. To get even more business for its rapidly growing overseas bank divisions (49 branches in 16 countries), the company has launched a special Export Marketing Service to try to help U.S. businessmen find new markets abroad. During Clark’s reign, the company has also become an international air-freight forwarder and bought a third of the stock of the Presidential Insurance Co., which does a $100 million business in 40 states.

Priceless Caviar. American Express’ greatest effort is still devoted to tourism, which makes no money by itself but generates much of the profit of other divisions. Says Clark: “We’re on the lookout for new business, but tourism is the glue that holds our company together.” The lion’s share of American Express’ earnings, for example, comes from interest and dividends earned by the traveler’s check “float”—the money paid into American Express for checks not yet cashed, which at the end of 1964 totaled $525.7 million. To woo the 58% of U.S. tourists who make less than $15,000 a year, American Express is concentrating on economy tourist plans with such fanciful names as “European Romance” and “Priceless Caviar” (to denote Eastern European stops), which cost between $746 and $1,395. The tourist’s favorite is the “Priceless Three Week Whirl,” which for as little as $695 whisks him through eleven countries in only 22 days.

That may seem quite a pace to many travelers who like to be able to focus their minds as well as their cameras, but it is no greater a pace than Howard Clark expects of himself. Later this month, he will leave on a trip that will take him to eight countries in 16 days.