Charles E. Merrill

By: Victoria Yates

Charles E. Merrill was born on the 19th of October 1885 in Green Cove Springs, Florida. He was the son of a physician and a drugstore owner and attended preparatory school in Deland, Florida before Amherst College. He tried various professions, newspaper work, semi-professional Baseball and law school until finding his talent for business. His first position was as an office boy in a New York City branch of a textile factory in 1907. Within two years he found himself the director of the company before joining a commercial paper company in 1909 where he was responsible for creating and managing a bond department. He resigned in 1913 to become a sales manager at Eastman, Dillon and Company, an established Wall Street firm.

He decided to start his own investment firm in 1914, leading him to found Charles E. Merrill & Co. in office space he sublet from Eastman, Dillon and Company. Six months later he took on a partner, Edmund Lynch, at which point the firm became Merrill Lynch and Company. Merrill’s successful underwriting for the McCrory stores gave the firm a reputation as an underwriter of chain stores, growing large and profitable. At the same time Merrill held stock warrants before selling them on as their value rose, amassing his own personal small fortune. His greatest underwriting success came with his work with Safeway Stores inc. in 1926, of which he was the largest shareholder.

In 1928 Merrill became convinced that stock prices were too high and attempted to convince his clients to sell their shares, advice which President Coolidge ignored, effectively saving them from the great crash of 1929. Feeling certain that the depression would be long-lived, Merrill decided to get out of the business in 1930, selling up $5 million of his firm’s capital to E.A. Pierce and Co., limiting his services to handling equity services for his growing list of chain store clients, including Western Auto supply and First National Stores. In 1932 he helped to found Family Circle, the first magazine distributed in grocery stores. He viewed this as a retirement of sorts, deciding to spend his time enjoying his homes in Palm Beach and Southampton. He was in the newspaper as much for his business as for the gossip he created in his personal, by 1940 having been married three times and having numerous affairs, he referred to them as “recharging his batteries”, earning him the nickname “Good time Charlie” amongst his friends.

Lynch passed away at the age of 52 in 1938, shortly before Merrill re-entered the business in 1940, merging Merrill Lynch with E.A Pierce & Co. In 1941 the company merged again to create Merrill Lynch, Pierce, Fenner, and Beane, becoming the largest brokerage in the world with 93 offices in cities throughout the world. In the 1940s Merrill sought to bring small investors to the market by engaging in a campaign entitled “Bring Wall Street to Main Street” which educated the public through printing pamphlets and advertisements. He also restructured his business to change the public’s perception of brokerage firms by implementing a training program for all of his employees to ensure they knew at least a little about the business and paying them on a regular salary instead of commission with bonuses as incentives, cancelling service charges and keeping commissions low. He further created a yearly report to be sent to his clients in order to reassure them that their money was safe at the firm. His strategy proved to be immensely successful, with the small investors flocking to the company and remaining loyal.

Many copied the ideas shown by Merrill but he consolidated the company’s position as the largest firm in the world, having a total of 115 offices in the US by the time of Merrill’s death in 1956 and a further 100 partners, an any given day handling 10% of transactions on the New York Stock Exchange. He is credited as being a highly influential force in the investment world, not only because of his success but due to the conservative image of Wall Street he helped create, and the new policies he implemented, making investing common-place for the middle-class. He donated roughly 95% of his $25 million estate to colleges, churches, and hospitals. His impact is still felt today and his ideas continue to have tremendous effect, leading a new era in investment banking.