American Express and Wells Fargo are large financial institutions that have emerged during the 19th century to support the growing interstate trade. Both were set in the 1850s to provide freight forwarding services and a range of financial services such as banking, money orders, and buying and selling gold. These activities were highly competitive because of their low barriers of entry, so any business that could succeed had to offer diversified and innovative services. Wells Fargo was able to establish comprehensive stagecoach and mail services in the western part of the United States, while American Express pursued a similar strategy in the northeast. American Express started offering money order services (in competition with the US postal system) and the innovation of traveler’s cheques (convertible monetary instruments) to support emerging international travel.
A core early advantage was their capacity to build a transactional network connecting several locations and generate added value from these transactions. The existence of a physical freight forwarding network supported the profitable financial transactions network, enabling a gradual shift towards financial activities. Financial activities would thus not have emerged without the commercial network that American Express and Wells Fargo were building in the late 19th century.
The completion of the transcontinental railway in 1869 undermined long-distance stagecoach and parcel delivery services. Both American Express and Wells Fargo shifted strategies and started to be involved in developing railways through their financing and operations. They also provided express train services to move mail and parcels between major cities and became among the largest rail operators in the United States. The consolidation of express rail services by the Interstate Commerce Commission in 1918 forced the sale of railroad assets and a further transition towards financial services.
By the 1920s, American Express and Wells Fargo became dominantly financial institutions that focused on the consolidation of regional banks, loans, as well as domestic and international financial transactions. They expanded their network, creating additional multiplying effects. A transforming innovation was the introduction of credit card services in the late 1950s and early 1960s, which became the major support of personal transactions and a significant source of revenue. Both corporations are illustrative of a shift from conventional transportation assets and services towards financialization through the multiplying effects of their networks.