Thank you

Note:  This blog has been inactive for quite some time now but I thought just in case anyone still has a link to it, I should say thanks and apologize for letting this site go dormant.  This post is not going to herald a revival, but has two purposes. First, I want to end the site formally as a complete, “goodbye.”  I found I was not a natural blogger; I don’t like to express everything that comes into my head and what I do want to say usually requires a larger space, and more than a couple hundred words.  I do publish op-eds (on energy-related topics) from time to time, and occasionally contribute pieces to the Houston Chronicle blog, Inside Policy & Politics, and to the blog at masterresource.org; in both of these cases, I write about energy.

Still, I did want to write something about a recent experience I had with the Bloomberg Businessweek group. This is not about energy, my major interest and usual focus, but rather about a much earlier work of mine, a history of the American Express Company (Crown 1987; reprint available through Beard Books).   I learned that Bloomberg reporters and editors cannot be trusted to report the facts, since in my experience they preferred a nonsense story to readily available (factual) sources. I’m not sure that this will be of much interest to anyone, but I decided to post it since, a) I couldn’t think of anyone who would want to publish it; and b) because as my late father would sometimes say, ‘I have to get something off my chest,’ I wanted to recount this story somewhere. 

 

Why Bloomberg BusinessWeek’s “Facts” are Untrustworthy 

“He never lets the facts stand in the way of a good story”

–Old joke (?) among journalists

 

A couple months ago a reporter from Bloomberg Businessweek, Devin Leonard, contacted me to ask some questions about the American Express Company.  My book, American Express: The People Who Built the Great Financial Empire, is the only independent history of the company using mostly original sources gleaned from 15 months of research in the company’s archives as well as searches through archival materials found elsewhere and interviews with people who had some connection to the history of American Express.

Leonard sent me an email that said “I’m reading your book. I have a few historical questions for you. Are you around this week?”  I agreed to the interview but told him my book was a better reference.

The article (“How Bad Will It Get for American Express?” 10/15/15) was mainly about the break between American Express and Costco and I cannot judge its accuracy with respect to that story but the article did have this bit of history:

“[AmEx CEO Kenneth] Chenault frequently evokes his 165-year-old company’s legacy. Three years ago, he appeared onstage at the American Museum of Natural History for what was billed as a ‘fireside chat’ with Facebook Chief Operating Officer Sheryl Sandberg. It was a tech event, so Chenault didn’t wear his usual suit and tie. Instead, he showed up in a brown zipper-neck sweater and an open-collar shirt. Yet his dark slacks were creased, and his shoes gleamed as if they’d just been polished. “How do you innovate?” Sandberg asked him.

“Smiling, Chenault replied that Amex knew a bit about the subject. ‘We didn’t start off in a dorm room or a garage,’ he said. ‘Probably in a stable.’ Founded in 1850, Amex transported packages from the East to the West Coast by stagecoach. It was a nice business until President William Howard Taft signed a bill in 1912 allowing the U.S. Post Office to carry packages at lower rates. 

Almost everything in this passage was factually wrong. It was true that the company was founded in 1850 and it transported packages. But otherwise it’s mostly a bunch of nonsense.  I have wondered whether Chenault was just trying to be funny, but there’s no indication he or the reporters thought anything was wrong. But he was wrong and so were the reporters. Here are the facts:

American Express was founded in 1850 as the merger of three existing express companies an agreement signed not in a stable but in a place called Mansion House, the main financial building of Buffalo, NY. None of the three companies had had any part in the invention of the express business. The main innovator was a man named William Harnden of Boston who started the business of carrying packages by steamship and railroad in 1839.  One of his agents was a man named Henry Wells, who later ran one of the companies that formed American Express in 1850. All of the companies followed Harnden’s basic model.

In fact, American Express didn’t ever do much innovating. It has created only one truly original product in its 165-year history: the American Express Traveler’s Cheque, which was launched in 1891.

Express companies, from Harnden’s onward, were created not to run on stagecoaches but on railroad and steamship lines; they promised speed—you know, EXPRESS—and stage coaches were not exactly speed burners. No one, by the way, “…transported packages from the East to the West Coast by stagecoach.” That statement is idiotic. In fact, American Express didn’t transport anything from East Coast to West Coast by any means until much later, and concentrated for many years on railroad routes in the Northeast and Midwest.

The parcel post was created in 1913 (though I guess Taft signed the bill in 1912), and it did present American Express and the other four major express companies with new competition. But AmExCo continued on as a package carrier until 1918 when wartime exigencies led to a government takeover of the railroads and forced a consolidation of the express industry into a single company (of which American Express was the largest shareholder and its CEO was actually the chief executive of both the consolidated express company and the old American Express).

I pointed this out to Bloomberg and received the following reply:

Dear Mr. Grossman,

Your letter to Businessweek was forwarded to me last week. I edited the story on American Express. I checked with both writers, and we are standing by the story. They corroborated it in multiple ways, not least by running it past American Express’s archivist before publication.

I really do appreciate the note, however. We love to be challenged by our readers.

Yours,

Bryant Urstadt

I was dismayed. In other words, they were standing by a story that is factually wrong because it was corroborated, not by the person who wrote the history or by the book he wrote, but by someone who guards historical materials.  “We love to be challenged by our readers” but we don’t accept challenges that point to evidence that we are wrong.

I have to say, however, it is disappointing that neither the archivist nor Mr. Chenault seems to have read my book or the company’s own  history Becoming American Express (2000), which paraphrased and at times lifted (all without attribution) materials from my book and so says mostly what I say about the early history.

I’m not surprised the company’s CEO likes to delve into the company’s history.  There are some interesting lessons for the present day, though he doesn’t seem to recount any of them. Mostly, the history is about a company—whose demise has been regularly predicted in the media and on Wall Street— that seems to survive and to grow by being both very lucky and opportunistic in the good sense of the term.

That the company was founded in a financial building and not a stable may be less amusing, but the tales of AmExCo’s narrow escapes from times of bad fortune provide entertaining anecdotes as well as instructions for today’s executives. I’d be happy to send a copy of my book to Mr. Chenault or anyone else who is interested in the company’s actual history.

********************************

OK. So it’s off my chest, but I certainly wouldn’t agree to an interview with Bloomberg Businessweek. Then again, I doubt I’ll be getting any more requests.

And with this post, I’m finished with my web site.  Thanks again to any/all visitors, and my apologies for my lack of attention to it these past couple years. If you are interested in learning about any recent op-eds (or other writings) you can find my email address at the Butler University web site.

 

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