U.S. Business: Wall Street: A Long Look Upward

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This discipline was drilled into Merrill Lynch by the man who can, more than anyone else, be called the firm's founder. He was Charles E. Merrill, son of a doctor and drugstore owner in Green Cove Springs, Fla. As a youth, Merrill went north to Amherst College, where he worked part time as a men's clothing salesman, made $1,300 in commissions during his freshman year. Though he left Amherst after two years, his recollections of the college were fond enough for the school to benefit handsomely from his will: Amherst currently gets about $500,000 annually in income on Merrill's estate, will some day get one-fifth of the principal, which continues to grow, now totals $35 million. From Amherst, Merrill went back to Florida, became a reporter-typesetter for a West Palm Beach newspaper. He finally hit Wall Street as a fledgling bond salesman in 1914, almost immediately opened his own firm with $4,000 in savings and a salesman of soda fountain supplies named Edmund Lynch as partner. They intended to call themselves "Merrill, Lynch & Co." but an errant printer forgot the comma. Merrill decided to ignore the error—to the confusion of later generations of investors, who still address letters to "Mr. Merrill Lynch."

By 1928, Merrill Lynch was prospering. But Merrill was among the first to notice ominous signs on Wall Street. "Now is the time to get out of debt," he advised friends and customers. And he practiced what he preached. Merrill and Lynch sold out, transferred $5,000,000 of their capital and most of their employees to the Chicago firm of E. A. Pierce & Co. They spent the Depression looking after their personal investments—which in Merrill's case included a succession of three wives. Lynch, whose main job over the years had been to temper Merrill's flamboyance, died in 1938.

First Floor Frills. In 1940 Merrill decided that it was safe to re-enter the brokerage business. He reconstituted Merrill Lynch and merged with E. A. Pierce; a year later, Fenner & Beane, which was among the most important commodity houses at Chicago's Board of Trade, entered the growing complex. During his restful Depression Period, Merrill had seen where the future lay: selling to small investors. "Let's bring Wall Street to Main Street," he exhorted his aborning herd. Main Street, however, was not yet that enthusiastic. Merrill's first annual report to customers, issued for 1940, recorded the only loss the firm has ever incurred —$309,000.

Undeterred, Merrill continued to expand his company, dropped from his personally written creed of conduct a couple of rules. Among these was one instruction to "Eliminate All Expensive Frills." From upstairs offices, Merrill Lynch moved down to showplace street corners, upped advertising, sent salesmen out to explain the stock market to anybody who would listen. The system worked. Comments Author Robert Sobel in his history of the New York Stock Market: "Merrill was able to accomplish something the New Deal attempted and could not carry through; he brought Wall Street to the nation."