August 7, 2019 • 41 mins
Henry Wells and William Fargo built a business based on trust, reliability, hard work and their good names, but now the company they built is muddling through scandals, investigations and lawsuits. Who were these men and what would they think if they could see the Wells Fargo of today? In this episode of Bizography we get to know the men that built this iconic business and why the culture they created didn't stick.
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Episode Transcript
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Speaker 1 (00:00):
In the mid eighteen hundreds, two men put their names
on a business and wrote themselves into history. In every
account of those early days, the two were lauded for
their ability to see two steps ahead, and for their
trustworthiness and reliability. They were Henry Wells and William Fargo.
(00:26):
This is Bisiography, the show where we dive into the
strange but true stories of iconic companies. Whether they're a
bright star in the midst of a massive dumpster fire,
or settling into the dust heap of history, they all
have a past worth knowing. I'm Dana Barrett, a former
tech executive and entrepreneur and a TV and radio host,
and over the course of my career, I've interviewed thousands
(00:49):
of business leaders and reported on the bright beginnings and
massive flame outs of the brands we know and love.
Some of their stories are inspiring, some get my blood boiling,
and some are just plain weird. So how did a
company that started with such an illustrious beginning end up
having to answer questions from Representative Maxine Waters like this?
(01:10):
In your October four seventeen testimony to the Senate Banking Committee,
you stated that you have the knowledge, ability and support
to make changes at Wales Fargo, And since you gave
that testimony, federal regulators have announced several enforcement actions relating
to customer abuses at Wales Fargo. With all of this
experience and the length of time that you have been there,
(01:31):
the roles that you have played, you have not been
able to keep Wales Fargo out of trouble. You keep
getting fined. Why should Wells Fargo continue to be the
size that it is and should it be downsized? Are
what else could be done? Well? I believe that Wells
Fargo serves our seventy million customers, one out of three
(01:51):
US households, in a very effective way today, and I
think the way in which we serve our customers is
reflective of the changes that I've made since I've become CEO.
All the changes that you said that you've made are
not evident, and you do not have the kind of
customer satisfaction that you are alluding to. Again, is Wells
(02:12):
Fargo too big to manage? The Wells Fargo story made
me angry, It made me want to change banks, and
it made me curious with me for emotional support, As
always is my producer, New Guy Nick. When you saw
all of this craziness next start to come out about
Wells Fargo. What what was your reaction? You're right, I'm glad.
I'm here for emotional support for you today, because when
(02:34):
you see banks doing this stuff, you're like, oh, no,
those are the people that have my money. Yeah, that
makes you really nervous. Yeah. And when Wells Fargo started
going wrong, they had my money literally yeah, yeah, super scary.
So when I look at all of the trouble that
Wells Fargo has been in over the last four years,
(02:54):
for me, it just seemed like there was a big
culture problem in that company. Um, the culture seemed to be,
at least at the top about dishonesty and greed and
and desperation maybe of those folks at the top too
to keep raising the value for shareholders, and so that
sort of put the people in the middle and the
(03:14):
lower runs, who may have been good people in impossible
situations that sadly is completely at odds with who the
original founders seemed to be. We seem to see this
a lot with companies. So here's I guess the real
question is. We know it was a guy named Wells
and a guy named Fargo, right, but where these like
buddy buddy guys, who did they just get into business together?
(03:36):
How were they better than this version of Wells Fargo. Yeah,
well that is the question. And we've talked about a
lot of duos who have started businesses over time, and
there's a variety of different reasons, I think to your point,
why um people come together to start a business. And
these guys were not sort of the typical buddy guys.
They were actually fairly um separated by their ages. They
were about thirteen years apart. So Henry Wells was the
(03:57):
older of the two. He was born in Vermont in
eighteen oh five, you know, just the other day. His
father was a minister. He was raised, you know, with
good family values, and the family moved from Vermont to
New York when he was pretty young. And he was
a working guy and he worked as a farm hand.
He apprenticed to a shoemaker. Can you yeah, I know.
(04:19):
Can you imagine if he just decided to go down
the shoe route instead, Right, that's really interesting that he
could have just made a farm hand to Wells shoes. Yeah,
it would have been a whole other thing. Oh my god, Dana,
that reminds me of a video from high school. This
could have been the commercial for Wells shoes. Cheers, Oh
my god, cheers. Let's get some ships. Let's get some ships.
(04:43):
Let's get some ships. Let's get some ships. Oh my god,
I totally love that. What what year was that? That
was like twelve years ago? Like oh seven, I was
in high school? Was one of those ridiculous first of
the viral videos on YouTube. But it just pops into
my head. I feel that I clearly missed that year.
But now I'm going to never get that out of
(05:03):
my head. I think we need to talk to Wil's
Fargo about starting a company with that, right, it would
be done, all right, And getting back to Henry Wells.
Even after the farm hand and shoe careers, he decided
to get into education as a career, and um he
established a series of schools for people with speech disorders
of all things, partly because he himself had a stutter
(05:26):
and he never really was able to overcome it, but
he wanted to help others who were dealing with similar problems.
That was awesome, all right. So this guy does seem
like a good guy right up to this point. So far,
he's a good person. Doing good things. And he was
a noticeable guy in the times, like you'll appreciate this
because you're you're big, dude. He was over six ft tall,
which in those days was really big. And um, he
(05:49):
was known even you know, in his younger years to
be ambitious. So he was never a guy that they
that you know, his family and friends thought was just
gonna sort of sit still in one place and be
a farm hand or a shoemaker. Um. And so after
this decade basically spent on building schools and focusing on education.
I guess at that point he realized, Okay, if I
want to keep going here, I gotta I gotta get
(06:09):
into business. Gotta make some money in the process, right right.
So now it's eighteen forty, he's in his thirties, and
he uh decides to get into the freight business because
he sort of saw the writing on the wall. He
saw where the country was going goods, you know, the
country's growing and expanding, and goods and services need to
be moved around. And so he gets into that business,
going to work for a a fledgling what they called
(06:31):
express company at the time. And it's funny because we
don't really think of that word now standing on its
own express except Federal Express. That's basically where that comes from.
Right A. Right, we do think of it, but not
really in terms of delivery so much, because American Express
is not that right anymore anymore. Absolutely, when I hear that, yeah,
you think of a credit card, not you know us exactly.
(06:52):
Of course, in any case, they called it that pretty
clearly at the time, Express company. So he went to
work for this company at the time called Harndon and Company,
and they did package delivery just up and down the
East coast. And about a year into that process working
for Harndon, Henry Wells is looking around and he says, look,
you guys got to expand to the west, at least
to Albany, New York. And Harndon was like, nope, we're good.
(07:14):
We're good where we are up and down the East coast.
And so right then and there, Henry Wells was like,
all right, you know what, you don't wanna you don't
want to do it. I got this and he started
going off and doing some entrepreneurial stuff. So he joined
with a couple of other guys at the time and
they formed a new express company called Pomeroy and Company.
Now this is one. So he only worked for Harndon
for about a year, and that company took on this
(07:37):
east west route between Albany and Buffalo, New York, and
was essentially a FedEx of its day mail and package
delivery uh from Albany to Buffalo and back. And here's
the thing. This hard working farm hand, shoemaker, six ft tall,
educator guy was a working man, so he did most
(07:57):
of the delivery himself. At the beginning, he went by stagecoach. Uh.
He went by by train when he could, and he
built a reputation for being reliable and trustworthy and and
because it was him personally, his name Henry Wells became
a household name in New York and people knew him
and they were excited when Henry Wells was coming to
(08:18):
town because he was bringing their mail and their packages
like their version of Santa Claus. Almost what a great
pr campaign. Absolutely yeah. And so of course it wasn't
just him, and he hired other delivery guys, agents they
called them. And at the time, the US Postal service
was unreliable and slow. So Henry Wells, you know, under
(08:38):
the guise of Palmer and Company, um sort of succeeded
at what they were doing by finding the quickest routes,
buying the fastest horses, and hiring the most skilled horseback
riders as agents. UM. And that's actually how he met Fargo.
Very interesting, So Fargo was a good rider. Just f
(09:00):
Why I am interesting that that skill could get you
all kinds of jobs back then? Yeah, imagine that right
doesn't get you very far today? So much now. I
just can't help though, but think of old Town Road
from Little nos X, that new song that's been going
viral for the last for however however long now, it
would have totally been far Gos theme music. Right, I
(09:20):
don't think I know it alright, I do kind of
love that, but I have to like challenge your current
(09:41):
millennial uh modern pop culture reference with like an eighties
pop culture reference, because the first thing that popped into
my head for some reason was the movie Say Anything,
where Lloyd Dobbler John Cusack describes UH to his girlfriend's
dad what he wants to do for a living. I
don't want to sell anything fine anything, or processing anything
as a career. I don't want to sell anything bad processed,
(10:03):
or buy anything sold or processed or process anything so
bought or processed, or repair anything sold water process. You know,
as a career, I don't want to do that. So
my father's in the army. He wants me to join,
but I can't work for that corporation. Um, so what
I've been doing these kickboxing If Lloyd Doubler had been
(10:24):
alive now, he could have just been a horseback writer
and made millions. Would have been a much better career choice. Maybe. Um.
The interesting thing too about the postal service before we
move on from that, is they were they had a monopoly.
The U S Postal Service at the time wasn't allowing
anybody else to deliver stuff. So what Palmer and Company
was doing with Henry Wells was basically illegal. Uh and
(10:47):
in fact, the postal agents were chasing after them all
the time. So I mean that could be a TV
show writing almost like the early version of the Wild West,
except on the East coast in sort of western New
York instead of in the West. During the US well
Fargo met Wells because so he, as I mentioned, was
the thirteen years younger. He was born in New York
(11:08):
around eighteen eighteen. He had twelve siblings. He was one
of twelve eleven siblings, and he started working really young,
probably because of that. So he started working at age thirteen,
also a hard working guy. He was delivering mail in
his hometown. Then he went to work for a grocer
in Syracuse. Uh, And he got his first job in
the freight and express industry, working for the railroad that
(11:29):
was the Syracuse to Albany line, And just by coincidence,
he happened to meet Henry Wells in that job. And
Henry Wells saw something in Fargo, I guess his horseback
riding skills, and hired him away from the railroad to
come work for PALMERA and Company as one of the agents.
So that's how the two came together. It was a
business arrangement. And that was an eighteen forty two by
(11:51):
the way, So by then, Henry Wells is thirty seven
years old, which is, you know, pretty mature in those days.
I mean, I know some manure thirty seven year olds now,
but at the time, that was a very different world. Yeah, uh.
And Fargo was only twenty four at the time, so
he was still a young dude. And so the two
of them came together and then for the next essentially
(12:11):
the next decade. Throughout the eighteen forties, Henry Wells, William Fargo,
Thaddius Pomeroy, a guy named John Warren Butterfield, and a
couple other guys created a whole bunch of different companies
with different names. They all were mixtures of their various names,
and they would like come together and form a partnership,
and then one would disagree and sell his shares, and
then they would form a different company, and then two
(12:33):
would and it was just the same sort of six
guys forming companies and disbanding them to do this work
in various regions of that part of the country at
the time. Do you think some of that maybe came
from the fact that it was illegal, and you know,
I think it has maybe, But I also think it
had more to almost to do with where they wanted
to go next geographically. They would sort of disagree about
(12:53):
what to do next, so they would go, all right, well,
you two don't want to do that, us too, I'll
do it. That's because there was that that was the
big westward of spansion was right there in the middle
of the eighteen hundreds. Right, I want to go to Missouri.
I'm gonna go to Kentucky. Yeah, and even just within
the East coast, I think they were sort of disagreeing
about how to do business. It never seemed like there
was really much fighting. They seemed to all get along,
at least from what we can tell looking back. It
(13:14):
didn't seem like it was in anger ever. It was
just sort of like, all right, you don't want to
do that, we'll do that, okay. And then they come
back together a year later and say, okay, let's do
this thing together. Um. And so that led right up
to the gold Rush years. So remember, and I'm not
a history buffa had to kind of study neck to
learn all this. But in eighteen forty eight, uh, news
that gold was discovered on the American River in Coloma,
(13:37):
California came to be known, and the president at the time, Pulk,
confirmed this in December eighty eight, and the gold rush began.
People started flowing out to California. Um. The numbers are crazy,
like right, like, it went in from fewer than a
thousand people out there in eighteen forty eight to more
(13:58):
than thirty thousand people in eighteen fifty. So here's a
random point of interesting trivia. Do you know what professional
football team got their name from the gold Rush. Oh, dear,
I hate when you do this tonight. You know who
I am about sports? It is tell me the San
Francisco I didn't know that, darn it. All right, fine,
you win, Nick wins one for nick um. Yeah. So,
(14:20):
in any case, it was during this time. Again, Remember
these guys are on the East Coast and they're in
New York. And Henry Wells is a mature guy at
this point. He's you know, he's in his early forties
by now. So he and the gang, Fargo and Pomeroy
and Butterfield and these guys they get together and uh,
they form American Express. That American indeed, the one that
(14:44):
we most of us have in our wallets today, that
was formed by these guys. And I feel like a
lot of people don't realize that. You think of Wells
and Fargo as just being Wells Fargo. He was a bank, right, right,
But actually they formed American Express, which again and was
a delivery company at the time with some financial services,
same as what Wells Fargo eventually was, and they ran it.
(15:07):
So Henry Wells was the president of American Express for
eighteen years and so and and William Fargo was the
secretary of the company, another high position you know, on
the board, uh and high up. And they kept those
jobs the whole time while they were also building Wells Fargo.
And the reason they decided to build Wells Fargo was,
here's this gold rush going on. The group of American
(15:30):
Express leadership decided they didn't want to go out west.
They weren't ready. They were they felt like, no, the
time's not right, it's too rough. We don't want to
do it. And so Wells and Fargo said, no, we're
gonna do it. So they went ahead and pushed west
with their own company, Wells Fargo, while continuing to run
(15:50):
American Express. Yeah. Crazy, So that is how the whole
thing got started. So it seems like the perfect time
for a short break. When we come back, we'll get
into how Wells Fargo the company really got going. So
(16:10):
Wells and Fargo start their namesake company, mostly because there
are other partners in American Express didn't have the same
vision they did, maybe didn't even want to work that hard.
But these guys saw the opportunity out west, and in
eighteen fifty two, kind of in the in the throngs
of of the gold Rush, Wells Fargo was born, and
technically the headquarters of Wells Fargo as we sort of
(16:34):
know it today was in San Francisco, even though both
Wells and Fargo lived in New York, in upstate New York,
and so they never really went out there. They went
to visit. Wells went to visit for three weeks, and
for the most part they trusted their West Coast people.
(16:55):
That is a lot of trust to put in someone,
especially when you can't just skype them. Yeah, that's right.
And keep of mind that the whole time, Yeah, there
was no skype then new guy neck Um. Keep in
mind of course that at the time not only were
they um running their business long distance, but they were
running American Express also. Um. But they just weren't They
weren't rough and tumble guys. They were suit wearing East
(17:18):
Coast guys. And Wells even at the time, after he
went for three weeks and came back sort of said literally,
I'm an old fogy compared to those people. He literally
used the words old fogy and and he said, you know, uh,
you know, now I'm paraphrasing, but he said, this is
that's not the life for me. I'm gonna leave it
to the guys who can handle that to handle that well.
(17:39):
At least he had the ability to look at it
and understand, yeah, no, not my not my style, right, um.
But these were men who had again built a reputation
of being reliable and trustworthy. That's how they built the
business they had on the East coast, and they carried
that out um to the West coast when they got
out there. Even when they first launched in eighteen fifty two,
(18:02):
one of the uh you know, I'm gonna say newspapers
of the time, it was called the Daily Placer Times
and transcript What a horrible name. Clearly that one didn't last. Um. Anyway,
this was a quote from that paper in eighteen fifty two, quote,
Wells Fargoing Company are but recently established in California, but
in other parts of the Union, their express has gained
an enviable reputation which they will doubtless fully sustain here
(18:26):
as they possess every facility and our men of responsibility
and untiring energy. Are you sure that wasn't an ad
placed in the paper? I mean that was a write
up by the editorial board. Yes. Also they wrote so beautifully.
Then we would be asleep if that was the way
our newspapers read now, Um, but look, these are the
kinds of of men that they were, and the way
(18:48):
they behaved even in their operation, and the way that
they had their managers who were out there operating was
in tune with that. It was aligned with that. So
for example, all of those you know, people that wanted
to strike it rich, we're out in California digging for gold,
and the miners had a problem because they were kind
of staying in shanties essentially, and they didn't have a
(19:10):
safe place to store their gold, so they were, you know,
getting ripped off all the time. There were thieves and
scoundrels out there along with um, the hard working miners
who were you know, when you were asleep. They were
taking your stuff. And so Henry Wells saw that going on,
and he said, look, if you trust Wells Fargo with
(19:31):
your possessions, your gold or whatever it is, your packages,
whatever it is, you will not lose money. We are
going to be here for we are going to be
the trustworthy source for these miners and these customers. So
the company Wells Fargo would only accept to travel with
or to hold what it could afford to lose. In
other words, if what they said at the time, this
(19:51):
is like crazy for the time, if one of their
stage coaches or train cars was robbed, then Wells Fargo
would reimburse the customer and help bring the culprits to justice. Wow. Right,
And so because of that, they were very slow growing
because they could only take as much as they could
(20:12):
afford to cover financially. Now they were making money with
American Express by then, they had a good, you know
seed to start with. Um, so they it's not like
they had no money, but they weren't growing the way
some of their competitors were at the time. So there
was there were a couple of other competitors out there,
one who was literally ten times the size of Wells Fargo.
And Wells Fargo grew, I mean, they had I think
(20:33):
twelve branches within a year or two out West. But
there were you know, these other companies that want gangbusters,
because well, if somebody got robbed them, so be it.
The customer lost their stuff, right, But because they had
this honorable, trustworthy way of operating, they grew very slowly. Ultimately,
it was that conservative business growth that saved their butts
(20:58):
because in eighteen fifty five there was a panic in
the gold markets and their competitors crumbled. But while Spargo
was small enough to withstand that they had their own funds,
they weren't, you know, they weren't hadn't borrowed to get
where they were, and so they were able to weather
that downturn. Was totally secure. Yeah, right, They weren't risking
(21:21):
with other people's money, right. I do have to say, though,
it's interesting that they had a plan like that in
place before. What is it now that covers banks of
the fdi C, Right, like a hundred thousand or two
hundred fifty thousand dollars in your bank account that didn't
exist at the time, and they kind of put that
on themselves. They themselves, right, And if you travel forward
in history, they were like that throughout the nineteen hundreds.
(21:42):
Like they also, uh, you know, weather the stock market crash,
they weathered World War One, they weathered World War two
in much the same way by being conservative and honest
and reliable and trustworthy. Right, I mean, this is how
they survived as long as they did. It was sort
of the core values of the company at the time.
But the thing that was different, I think is that
(22:05):
those you know, in those days, you didn't have to
like write your company mission and and then put policies
in place to enforce it. You just sort of knew
that the people you hired, I think we're good. I mean,
maybe that's me just looking back at the past with
rose colored glasses, but it really does seem like they
were who they were. They hired like minded people and
that's how they ran their business right. Well, I'm sure
(22:26):
having the security too, of especially after all of that
goes down, you're working for the only express company that
made it out there, then that's going to make your cut,
your employees just in general a little more loyal. So
if you operate the business strongly, the people inside of
it noticed that. Yeah, absolutely, And so these guys grew
their business throughout the late eighteen hundreds and into the
(22:47):
nineteen hundreds in large part by acquisition, and they acquired
some pretty famous companies. They created the Overland Mail Company,
which a lot of people have heard of, which didn't
last very long. And they also acquired the Pony Express,
which is very amoss acquired. Yeah, it existed and they
bought it, and it didn't last, and you know that
we could do a whole podcast on just on the
(23:07):
Pony Express, I think. But it's also now a big
part of the legacy of Wells Fargo because they owned it,
uh and they continued to grow that way through acquisition
over many years. But again, remember they weren't really doing
a whole lot themselves for the business Wells and Fargo.
They were in New York doing all kinds of other things.
It was like, I think eighteen sixty eight when Henry
(23:27):
Wells founded Wells College for Women, Fargo was running for
political office and was a mayor, I think it was,
And so they were, Um, they were very much into
serving their communities and giving back as best they could.
These were really good men, and um, when you look
forward to today, you sort of have to wonder what happened.
(23:49):
How did it go from those men doing such good
things and creating this legacy of their brand to where
we are now. Absolutely, and I think that we've covered
that in some of the other episodes too. When you
look at you know, like Sears, for example, it was
the man's goal when he started it was to try
and help people who lived in the middle of nowhere,
(24:11):
to have the accessibility to stuff that people who live
in the city had. That was his goal, that was
his mission. And as long as he was doing that,
even when it turned retail, it was working. But when
that was no longer the goal to provide that service
to the customer number one tip top, everything came crashing. Yeah.
I think those stories have a lot of parallels, and
I think part of it is that the times were
(24:32):
one way in the eighteen hundreds when these companies began,
and they are very different now. And so these companies,
Wells Fargo grew by acquisition and up until modern times.
I mean most of us still remember Rocovia, which is
one of the banks that became a part of Wells Fargo,
and there were several other big name banks throughout the
country that rolled up into Wells Fargo. They all had
(24:52):
their own cultures. Uh, they didn't have the culture of
well Henry Wells and William Fargo. They had their own cultures,
and they were acquiring all nds of small community banks
along the way as well, some of which probably had
great cultures and some that probably didn't. So what happens
to Wells Fargo when all of those cultures come together
that brings us up to modern times, and we'll talk
about that right after this. Okay, Dana, So you said
(25:21):
that the culture of Wells Fargo changed as the times changed,
But what do you mean by that? Aren't people just people?
Were just people? Oh my god, Nick, you totally should
have been a child of the eighties because that is
like right out of the depeche Mode song people are People.
So I totally love that song. It's going to be
(25:49):
a new theme song every time I have that in
my head. Now, well, people are people and now depeche
Mode turnabout is fair playing my friend? And yes, people
are people. But I think society has really changed over
time such that, you know, in the good old days,
and I admit that I might be wearing rose colored
glasses looking back, but I feel like the bad guys,
(26:10):
we're like wearing uniforms like you could pick them out,
you know, like in the cowboy part of the world,
they wore black cowboy hats and and yeah around their face,
and the sheriffs wore stars on their chests, right, and
you can tell the difference. And criminals were snake oil
salesman and everybody could kind of see them coming. Um, now,
(26:31):
I feel like, look at the college admission scandal. The
criminals are your your favorite you know, TV actress, and
your neighbor next door, who's or or the kid in
the college dorm room next to you, And so I
feel like times really have changed. There's so much more
white collar crime now, I think than there was then.
Not that it didn't exist at all, but I think
there's so much more of it now. And you know,
(26:53):
in order for people to sort of stay in line now,
it's almost like they really have to be held in line.
Back then, I think there was a credo to some extent,
if you were an upstanding citizen, you were an upstanding citizen.
If you were in the mob, you were in the mob,
and that was a different creative Yeah, like an unspoken
honor code either way. Right, Yeah, it does feel like
it was that way. I mean you can even look
(27:15):
at politics, right because you can look at like at
George Herbert Walker Bush, who never spoke about himself, who
didn't want to use the word I. I mean, that
was a known thing. And now you look at our
current presidents who were all about themselves. Right. It's just
the world is different, and so I think what we
should do, is you take the list of like the
good stuff that Wells Fargo, the company and the individuals
(27:35):
Wells and Fargo we're doing kind of in the eighteen
hundreds and through the nineteen hundreds, and I'll take the
list of the current scandals and let's just sort of
do a compare and contrast so you can. So let's start.
Let's start with good news. Right. So we talked in
the last part of the show. We talked about, you know,
the women for the College for Women and everything else.
So here's one that I think is a really interesting
(27:57):
kind of progressive point from Wells Fargo is in eighteen
eighty eight, they put a policy in place to all
of their employees company wide that said, quote proper respect
must be shown to all and polite and courteous treatment
of all customers, let them be men, women, or children,
rich or poor, white or black. Way ahead of the time,
(28:23):
I mean, women weren't allowed to have their own accounts
even at that time, right, They weren't allowed to sign
for things that I had to come in and access
their husband's account. A lot of times, I don't know
why I've heard this before. Women would go into the
bank with their marriage certificate to prove they could get
into their husband's account because they couldn't have their own.
That's nuts, right, And I mean think about the culture
for black people at the time. I mean, it was
in the nineteen sixties when we had civil rights, slavery
(28:47):
what just ended not long ago, and they're saying, treat
black people like everybody else in the eighteen hundreds. Fast
forward to the to the odds. Okay, one of the
early UH fraud scannedals that Wells Fargo was accused of
in two thousand nine was charging African American and Hispanic
(29:07):
borrowers more money for mortgages. They were allegedly steering Blacks
and Hispanics into high cost, subprime loans. Yikes, different culture,
different era, different time time. How could that even happen?
If Wells and Fargo were alive, that would not have
(29:28):
been happening, right, especially something that's been in place in
the company for so so long. Here's another interesting good
thing that I've seen that Wells Fargo did back nineteen
o six, the great San Francisco fire after the earthquake
and everything over five hundred. If their employees were out
of work, they lost their homes, they lost their possessions,
they had other things to worry about. And while they
(29:49):
were trying to get their lives back together and not
delivering for Wells Fargo, they still paid their complete salaries
to those employees to make sure that they would be
able to get on their feet. Okay, so that's that's
Wells white hat Wells Fargo in the in the White
years nineteen o six. All right, let's fast forward, uh.
(30:10):
In let's see two thousand ten, Wells Fargo was fined
uh for overdraft practices designed to gouge consumers and profiteer
at their expense, and for misleading consumers about how the
bank process transactions and assessed overdraft fees. So they're basically
ripping off people who already are struggling, because that's why
(30:31):
you bounce a check in the first place. Oh my gosh,
going out of their way to gouge people. When before
they went out of their way at the fire, they
operated straight out of the U. S. Mint because there
were no banks open. They were like, Hey, the Mint's
got our money, we'll just do it there. Yeah. How nuts?
Is that? That's black hat Wells Fargo of modern times.
So here's much more modern little bit of white hat.
(30:52):
Wells Fargo is in the nineteen thirties, right, the stock
market crash in Great Depression. We all know about it
at the time. Wells Fargo is led by Frederick Lippmann,
and while the Great Depression was going on, that only
did Wells Fargo offer loans to veterans from World War
One and the other wars right after to try and say, hey, yeah,
we know everything's gone to you know what, you still
(31:14):
got to get back on your feet and we have
the ability. Oh yeah, and Wells Fargo still continue to
pay all the dividends on every account throughout the Great Depression.
The president, Frederick Clippman even said quote, we will meet
all demands under any circumstances. Yeah. This makes me want
to mention the modern scandal where they were repossessing cars
(31:37):
from veterans. Remember that one, Um, But I want to
get to the cross selling and the uh, the sales
quotas put on the branches in modern times. This is
sort of the crux of the current scandal that one
heard about, right, this was the big modern scandal. So
Elizabeth Warren, of course, we we already heard in this
episode from Maxine Waters talking to the current well the
(31:58):
now former CEO, Tim Flowan. But this was back in
the midst of all the fraud, where Elizabeth Warren is
uh digging into the then CEO John Stump. In your
time as chairman and CEO, Wells has been famous for
cross selling, which is pushing existing customers to open more accounts.
(32:18):
Cross selling is one of the main reasons that Wells
has become the most valuable bank in the world. Other
big banks average fewer than three accounts per customer. But
you set the target at eight accounts. And that's not
because you ran the numbers and found that the average
customer needed eight banking accounts. It is because quote eight
(32:43):
rhymes with great. This was your rationale right there in
your twenty ten annual report. So you have the start
of the company with Henry Wells and William Fargo doing
what they did, riding themselves from town to town to
liver mail and establish a culture of trustworthiness and reliability.
(33:05):
And then you compare that to the CEO John Stump
saying we're gonna sell each person eight accounts, whether they
need them or not, because well, you know, eight is great.
Eight is great. Eight rhymes with great. I think we
could be CEOs, right, and I could have come up
with that. Yeah, I think they could hire Dr SEUs
or or maybe you know, maybe Barack Obama is looking
(33:27):
for a job. Now, that's sam I am, that's Sam
I am. I do not like that's Sam i am.
Do you like green eggs in hand? I do not
like them, sam i am, I do not like green eggs?
And him, he was a good president, so he probably
would have been a better president of Wells Fargo too.
This is exactly what I mean when I say the
(33:48):
culture has changed. You know, this is a country, uh
and maybe a world, but certainly a country in which
it has become all about constant growth and shareholder value.
And it is almos us at any expense. In those days,
Wells and Fargo, in the early days, they were so
conservative and so concerned about their reputation and about serving
(34:08):
their community that they didn't take those kind of risks.
They didn't push that hard because they didn't need to.
They built an incredible, you know, iconic company that lasted
centuries on being reliable, trustworthy, forward thinking, innovative, you know,
open to all cultures and all people, and and supportive
(34:28):
and all of those things, and then now it's about greed. Uh,
it's about money. John Stump, when all this was going down,
in the midst of that fraud, was making you know,
hundreds of times more than the average emplay at Wells
Fargo and taking no responsibility. It's just it's just so
clear when you look back at how the culture of
(34:49):
the country and the culture of the business sort of
faltered together. Uh. You know, the big question I think
going forward is can Wells Fargo come back from this?
Can there legacy that started being all about trust and
all about reliability. Can they get it back? That's the
big question. And we'll get to that right after this.
(35:16):
In the midst of the Wells Fargo scandal of the
last four or five years, CEO John Stump ultimately was
held accountable and he sort of was forced to retire.
Will Air quote that, Um, this is a guy who
we called, you know, Stumpy the clown on our show
while the while the scandal was going on. He was
(35:36):
then replaced by CEO Tim Sloan, And now here comes
Tim Sloan. Can I fix this? This is a guy
who's been with the company for thirty years. He's got
all this experience, he knows what the culture is supposed
to be and he's going to come in and save
the day. So that leads the company to make some
policy changes in fairness. They did um they did stop
(35:58):
the sales quotas for the branches, so that was something,
but the rest of it seemed kind of like lipstick
on a pig, doing things like fancy commercials to win
back your trust. We know the value of trust. We
were built on it back when the country went west
for gold. We were the ones who carried it back east.
We built on that trust. We always found the way
(36:23):
until we lost it. But that isn't where the story ends.
It's where it starts again with a complete recommitment to
you so we can focus on your satisfaction. We're holding
ourselves accountable to find and fix issues proactively because earning
back your trust is our greatest priority. It's a new
(36:46):
day at Wells Fargo, but it's a lot like our
first day or is it. I don't know. Listen, this
is the question that Wells Fargo is struggling with right now.
That commercial was from last year. That was commercial and
you know, the question really is have they overcome their
bad behavior or are they just too big to do so.
(37:07):
I mean, the reality is I pulled most of my
accounts out. There was one I left open that I
didn't use, and it was a credit card account. But
I pulled my accounts out in the middle of the
scandal because I didn't want them to have my money, right,
I did too, same thing, And I mean, I've I've
got a checking account, that's it. And so I said, yeah,
I don't want I don't not rich, I don't have
a bunch of a whole bunch of savings, but what
(37:29):
little I have do I really want these sketchy people
to be in charge of it? And yeah, even for me,
my little single account, it was a pain in the
butt to get it out of there. They were like
trying to dig their teeth in and say, well, you know,
we're really sorry. That doesn't change anything, right, And so
I wasn't able to really track what was happening besides
watching the commercials and and sort of hearing the pr campaign.
(37:50):
I didn't have that personal tied to the bank anymore
in the last couple of years. But I was skeptical
because I just know how big they are and how
hard it is to make a change when you're that size.
So the question then remains, are they making the change? Well,
I ultimately got sucked back in personally over the last
several months because my father's accounts are there and my
(38:11):
father uh is sort of in the decline of age
with Alzheimer's and dementia and those kinds of things, and
so I had to start interacting with Wells Fargo again.
And let me just say, I'm going to shortcut the
story neck two thumbs down, two thumbs down. The customer services. Look,
there were I dealt with some great individual people, but overall,
(38:33):
the system that exists in Wells Fargo was not set
up to serve me as a customer. It's just that simple.
And so that brings me right back to where we
started with Maxim Waters. All the changes that you said
that you've made are not evident, and you do not
have the kind of customer satisfaction that you are alluding to. Again,
(38:55):
is Wales Fargo too big to manage? Yeah, that's the question.
I think, even with the best intentions, it's going to
be almost impossible for them to change the culture of
a company that size. Absolutely, and like we like we
said before, you know, they they acquired a lot of
these small town banks, and I think that was something
(39:16):
they did so good for the longest time. Was even
though it was big Wells Fargo, you still had a
small town feel. And they lost that right around the
financial crisis, and then obviously they lost it in the
corporate offices as well. I don't think there's a way,
as one big, massive thing, you can get back to it.
And it's just like any other relationship after that trust
has been broken that badly, can you ever really trust
(39:38):
them again? Right? And you know, look, I at the
end of the day, all older companies I think that
didn't really secure their founders vision are going to have
this kind of struggle if they haven't already. It's the
same thing we talked about with Sears. It's the same
thing here with Wells Fargo, and I think we're going
to continue to see it over and over again with
these older iconic companies. If they didn't cement that vision
(40:02):
into the culture of the company as it grew, I
don't see how Wells Fargo can survive. And as we
are recording this, the most recent CEO has been forced
to air quotes retire, So that's where we are. They're
going to bring in another guy who's gonna do what
more of the same. How do you change that? That's
the question. And if you're you know, somebody who's growing
(40:23):
a business, maybe the lesson here is to cement your
vision in writing and keep it very clear at the
forefront of the company mission always because once you're gone
and you're out of there, there's no telling. There's no telling.
That is our show for today. This has been Physiography,
and it will be again next time see it then.
(40:47):
Phisiography is produced by the I Heart Podcast Network. I'm
your host Dana Barrett. My co host and producer is
Nick Bean, Our executive producer is Christopher Hasiotis, and Josh
Thame provides audio production. Have questions, just want to give
us feedback or have a company you'd like us to cover.
Email us at info at physiography dot Show, or contact
us on social I'm at the Danta Barrett on Facebook, Twitter,
(41:10):
and Instagram, or just search for Danta Barrett on LinkedIn.
In the mid eighteen hundreds, two men put their names
on a business and wrote themselves into history. In every
account of those early days, the two were lauded for
their ability to see two steps ahead, and for their
trustworthiness and reliability. They were Henry Wells and William Fargo.
(00:26):
This is Bisiography, the show where we dive into the
strange but true stories of iconic companies. Whether they're a
bright star in the midst of a massive dumpster fire,
or settling into the dust heap of history, they all
have a past worth knowing. I'm Dana Barrett, a former
tech executive and entrepreneur and a TV and radio host,
and over the course of my career, I've interviewed thousands
(00:49):
of business leaders and reported on the bright beginnings and
massive flame outs of the brands we know and love.
Some of their stories are inspiring, some get my blood boiling,
and some are just plain weird. So how did a
company that started with such an illustrious beginning end up
having to answer questions from Representative Maxine Waters like this?
(01:10):
In your October four seventeen testimony to the Senate Banking Committee,
you stated that you have the knowledge, ability and support
to make changes at Wales Fargo, And since you gave
that testimony, federal regulators have announced several enforcement actions relating
to customer abuses at Wales Fargo. With all of this
experience and the length of time that you have been there,
(01:31):
the roles that you have played, you have not been
able to keep Wales Fargo out of trouble. You keep
getting fined. Why should Wells Fargo continue to be the
size that it is and should it be downsized? Are
what else could be done? Well? I believe that Wells
Fargo serves our seventy million customers, one out of three
(01:51):
US households, in a very effective way today, and I
think the way in which we serve our customers is
reflective of the changes that I've made since I've become CEO.
All the changes that you said that you've made are
not evident, and you do not have the kind of
customer satisfaction that you are alluding to. Again, is Wells
(02:12):
Fargo too big to manage? The Wells Fargo story made
me angry, It made me want to change banks, and
it made me curious with me for emotional support, As
always is my producer, New Guy Nick. When you saw
all of this craziness next start to come out about
Wells Fargo. What what was your reaction? You're right, I'm glad.
I'm here for emotional support for you today, because when
(02:34):
you see banks doing this stuff, you're like, oh, no,
those are the people that have my money. Yeah, that
makes you really nervous. Yeah. And when Wells Fargo started
going wrong, they had my money literally yeah, yeah, super scary.
So when I look at all of the trouble that
Wells Fargo has been in over the last four years,
(02:54):
for me, it just seemed like there was a big
culture problem in that company. Um, the culture seemed to be,
at least at the top about dishonesty and greed and
and desperation maybe of those folks at the top too
to keep raising the value for shareholders, and so that
sort of put the people in the middle and the
(03:14):
lower runs, who may have been good people in impossible
situations that sadly is completely at odds with who the
original founders seemed to be. We seem to see this
a lot with companies. So here's I guess the real
question is. We know it was a guy named Wells
and a guy named Fargo, right, but where these like
buddy buddy guys, who did they just get into business together?
(03:36):
How were they better than this version of Wells Fargo. Yeah,
well that is the question. And we've talked about a
lot of duos who have started businesses over time, and
there's a variety of different reasons, I think to your point,
why um people come together to start a business. And
these guys were not sort of the typical buddy guys.
They were actually fairly um separated by their ages. They
were about thirteen years apart. So Henry Wells was the
(03:57):
older of the two. He was born in Vermont in
eighteen oh five, you know, just the other day. His
father was a minister. He was raised, you know, with
good family values, and the family moved from Vermont to
New York when he was pretty young. And he was
a working guy and he worked as a farm hand.
He apprenticed to a shoemaker. Can you yeah, I know.
(04:19):
Can you imagine if he just decided to go down
the shoe route instead, Right, that's really interesting that he
could have just made a farm hand to Wells shoes. Yeah,
it would have been a whole other thing. Oh my god, Dana,
that reminds me of a video from high school. This
could have been the commercial for Wells shoes. Cheers, Oh
my god, cheers. Let's get some ships. Let's get some ships.
(04:43):
Let's get some ships. Let's get some ships. Oh my god,
I totally love that. What what year was that? That
was like twelve years ago? Like oh seven, I was
in high school? Was one of those ridiculous first of
the viral videos on YouTube. But it just pops into
my head. I feel that I clearly missed that year.
But now I'm going to never get that out of
(05:03):
my head. I think we need to talk to Wil's
Fargo about starting a company with that, right, it would
be done, all right, And getting back to Henry Wells.
Even after the farm hand and shoe careers, he decided
to get into education as a career, and um he
established a series of schools for people with speech disorders
of all things, partly because he himself had a stutter
(05:26):
and he never really was able to overcome it, but
he wanted to help others who were dealing with similar problems.
That was awesome, all right. So this guy does seem
like a good guy right up to this point. So far,
he's a good person. Doing good things. And he was
a noticeable guy in the times, like you'll appreciate this
because you're you're big, dude. He was over six ft tall,
which in those days was really big. And um, he
(05:49):
was known even you know, in his younger years to
be ambitious. So he was never a guy that they
that you know, his family and friends thought was just
gonna sort of sit still in one place and be
a farm hand or a shoemaker. Um. And so after
this decade basically spent on building schools and focusing on education.
I guess at that point he realized, Okay, if I
want to keep going here, I gotta I gotta get
(06:09):
into business. Gotta make some money in the process, right right.
So now it's eighteen forty, he's in his thirties, and
he uh decides to get into the freight business because
he sort of saw the writing on the wall. He
saw where the country was going goods, you know, the
country's growing and expanding, and goods and services need to
be moved around. And so he gets into that business,
going to work for a a fledgling what they called
(06:31):
express company at the time. And it's funny because we
don't really think of that word now standing on its
own express except Federal Express. That's basically where that comes from.
Right A. Right, we do think of it, but not
really in terms of delivery so much, because American Express
is not that right anymore anymore. Absolutely, when I hear that, yeah,
you think of a credit card, not you know us exactly.
(06:52):
Of course, in any case, they called it that pretty
clearly at the time, Express company. So he went to
work for this company at the time called Harndon and Company,
and they did package delivery just up and down the
East coast. And about a year into that process working
for Harndon, Henry Wells is looking around and he says, look,
you guys got to expand to the west, at least
to Albany, New York. And Harndon was like, nope, we're good.
(07:14):
We're good where we are up and down the East coast.
And so right then and there, Henry Wells was like,
all right, you know what, you don't wanna you don't
want to do it. I got this and he started
going off and doing some entrepreneurial stuff. So he joined
with a couple of other guys at the time and
they formed a new express company called Pomeroy and Company.
Now this is one. So he only worked for Harndon
for about a year, and that company took on this
(07:37):
east west route between Albany and Buffalo, New York, and
was essentially a FedEx of its day mail and package
delivery uh from Albany to Buffalo and back. And here's
the thing. This hard working farm hand, shoemaker, six ft tall,
educator guy was a working man, so he did most
(07:57):
of the delivery himself. At the beginning, he went by stagecoach. Uh.
He went by by train when he could, and he
built a reputation for being reliable and trustworthy and and
because it was him personally, his name Henry Wells became
a household name in New York and people knew him
and they were excited when Henry Wells was coming to
(08:18):
town because he was bringing their mail and their packages
like their version of Santa Claus. Almost what a great
pr campaign. Absolutely yeah. And so of course it wasn't
just him, and he hired other delivery guys, agents they
called them. And at the time, the US Postal service
was unreliable and slow. So Henry Wells, you know, under
(08:38):
the guise of Palmer and Company, um sort of succeeded
at what they were doing by finding the quickest routes,
buying the fastest horses, and hiring the most skilled horseback
riders as agents. UM. And that's actually how he met Fargo.
Very interesting, So Fargo was a good rider. Just f
(09:00):
Why I am interesting that that skill could get you
all kinds of jobs back then? Yeah, imagine that right
doesn't get you very far today? So much now. I
just can't help though, but think of old Town Road
from Little nos X, that new song that's been going
viral for the last for however however long now, it
would have totally been far Gos theme music. Right, I
(09:20):
don't think I know it alright, I do kind of
love that, but I have to like challenge your current
(09:41):
millennial uh modern pop culture reference with like an eighties
pop culture reference, because the first thing that popped into
my head for some reason was the movie Say Anything,
where Lloyd Dobbler John Cusack describes UH to his girlfriend's
dad what he wants to do for a living. I
don't want to sell anything fine anything, or processing anything
as a career. I don't want to sell anything bad processed,
(10:03):
or buy anything sold or processed or process anything so
bought or processed, or repair anything sold water process. You know,
as a career, I don't want to do that. So
my father's in the army. He wants me to join,
but I can't work for that corporation. Um, so what
I've been doing these kickboxing If Lloyd Doubler had been
(10:24):
alive now, he could have just been a horseback writer
and made millions. Would have been a much better career choice. Maybe. Um.
The interesting thing too about the postal service before we
move on from that, is they were they had a monopoly.
The U S Postal Service at the time wasn't allowing
anybody else to deliver stuff. So what Palmer and Company
was doing with Henry Wells was basically illegal. Uh and
(10:47):
in fact, the postal agents were chasing after them all
the time. So I mean that could be a TV
show writing almost like the early version of the Wild West,
except on the East coast in sort of western New
York instead of in the West. During the US well
Fargo met Wells because so he, as I mentioned, was
the thirteen years younger. He was born in New York
(11:08):
around eighteen eighteen. He had twelve siblings. He was one
of twelve eleven siblings, and he started working really young,
probably because of that. So he started working at age thirteen,
also a hard working guy. He was delivering mail in
his hometown. Then he went to work for a grocer
in Syracuse. Uh, And he got his first job in
the freight and express industry, working for the railroad that
(11:29):
was the Syracuse to Albany line, And just by coincidence,
he happened to meet Henry Wells in that job. And
Henry Wells saw something in Fargo, I guess his horseback
riding skills, and hired him away from the railroad to
come work for PALMERA and Company as one of the agents.
So that's how the two came together. It was a
business arrangement. And that was an eighteen forty two by
(11:51):
the way, So by then, Henry Wells is thirty seven
years old, which is, you know, pretty mature in those days.
I mean, I know some manure thirty seven year olds now,
but at the time, that was a very different world. Yeah, uh.
And Fargo was only twenty four at the time, so
he was still a young dude. And so the two
of them came together and then for the next essentially
(12:11):
the next decade. Throughout the eighteen forties, Henry Wells, William Fargo,
Thaddius Pomeroy, a guy named John Warren Butterfield, and a
couple other guys created a whole bunch of different companies
with different names. They all were mixtures of their various names,
and they would like come together and form a partnership,
and then one would disagree and sell his shares, and
then they would form a different company, and then two
(12:33):
would and it was just the same sort of six
guys forming companies and disbanding them to do this work
in various regions of that part of the country at
the time. Do you think some of that maybe came
from the fact that it was illegal, and you know,
I think it has maybe, But I also think it
had more to almost to do with where they wanted
to go next geographically. They would sort of disagree about
(12:53):
what to do next, so they would go, all right, well,
you two don't want to do that, us too, I'll
do it. That's because there was that that was the
big westward of spansion was right there in the middle
of the eighteen hundreds. Right, I want to go to Missouri.
I'm gonna go to Kentucky. Yeah, and even just within
the East coast, I think they were sort of disagreeing
about how to do business. It never seemed like there
was really much fighting. They seemed to all get along,
at least from what we can tell looking back. It
(13:14):
didn't seem like it was in anger ever. It was
just sort of like, all right, you don't want to
do that, we'll do that, okay. And then they come
back together a year later and say, okay, let's do
this thing together. Um. And so that led right up
to the gold Rush years. So remember, and I'm not
a history buffa had to kind of study neck to
learn all this. But in eighteen forty eight, uh, news
that gold was discovered on the American River in Coloma,
(13:37):
California came to be known, and the president at the time, Pulk,
confirmed this in December eighty eight, and the gold rush began.
People started flowing out to California. Um. The numbers are crazy,
like right, like, it went in from fewer than a
thousand people out there in eighteen forty eight to more
(13:58):
than thirty thousand people in eighteen fifty. So here's a
random point of interesting trivia. Do you know what professional
football team got their name from the gold Rush. Oh, dear,
I hate when you do this tonight. You know who
I am about sports? It is tell me the San
Francisco I didn't know that, darn it. All right, fine,
you win, Nick wins one for nick um. Yeah. So,
(14:20):
in any case, it was during this time. Again, Remember
these guys are on the East Coast and they're in
New York. And Henry Wells is a mature guy at
this point. He's you know, he's in his early forties
by now. So he and the gang, Fargo and Pomeroy
and Butterfield and these guys they get together and uh,
they form American Express. That American indeed, the one that
(14:44):
we most of us have in our wallets today, that
was formed by these guys. And I feel like a
lot of people don't realize that. You think of Wells
and Fargo as just being Wells Fargo. He was a bank, right, right,
But actually they formed American Express, which again and was
a delivery company at the time with some financial services,
same as what Wells Fargo eventually was, and they ran it.
(15:07):
So Henry Wells was the president of American Express for
eighteen years and so and and William Fargo was the
secretary of the company, another high position you know, on
the board, uh and high up. And they kept those
jobs the whole time while they were also building Wells Fargo.
And the reason they decided to build Wells Fargo was,
here's this gold rush going on. The group of American
(15:30):
Express leadership decided they didn't want to go out west.
They weren't ready. They were they felt like, no, the
time's not right, it's too rough. We don't want to
do it. And so Wells and Fargo said, no, we're
gonna do it. So they went ahead and pushed west
with their own company, Wells Fargo, while continuing to run
(15:50):
American Express. Yeah. Crazy, So that is how the whole
thing got started. So it seems like the perfect time
for a short break. When we come back, we'll get
into how Wells Fargo the company really got going. So
(16:10):
Wells and Fargo start their namesake company, mostly because there
are other partners in American Express didn't have the same
vision they did, maybe didn't even want to work that hard.
But these guys saw the opportunity out west, and in
eighteen fifty two, kind of in the in the throngs
of of the gold Rush, Wells Fargo was born, and
technically the headquarters of Wells Fargo as we sort of
(16:34):
know it today was in San Francisco, even though both
Wells and Fargo lived in New York, in upstate New York,
and so they never really went out there. They went
to visit. Wells went to visit for three weeks, and
for the most part they trusted their West Coast people.
(16:55):
That is a lot of trust to put in someone,
especially when you can't just skype them. Yeah, that's right.
And keep of mind that the whole time, Yeah, there
was no skype then new guy neck Um. Keep in
mind of course that at the time not only were
they um running their business long distance, but they were
running American Express also. Um. But they just weren't They
weren't rough and tumble guys. They were suit wearing East
(17:18):
Coast guys. And Wells even at the time, after he
went for three weeks and came back sort of said literally,
I'm an old fogy compared to those people. He literally
used the words old fogy and and he said, you know, uh,
you know, now I'm paraphrasing, but he said, this is
that's not the life for me. I'm gonna leave it
to the guys who can handle that to handle that well.
(17:39):
At least he had the ability to look at it
and understand, yeah, no, not my not my style, right, um.
But these were men who had again built a reputation
of being reliable and trustworthy. That's how they built the
business they had on the East coast, and they carried
that out um to the West coast when they got
out there. Even when they first launched in eighteen fifty two,
(18:02):
one of the uh you know, I'm gonna say newspapers
of the time, it was called the Daily Placer Times
and transcript What a horrible name. Clearly that one didn't last. Um. Anyway,
this was a quote from that paper in eighteen fifty two, quote,
Wells Fargoing Company are but recently established in California, but
in other parts of the Union, their express has gained
an enviable reputation which they will doubtless fully sustain here
(18:26):
as they possess every facility and our men of responsibility
and untiring energy. Are you sure that wasn't an ad
placed in the paper? I mean that was a write
up by the editorial board. Yes. Also they wrote so beautifully.
Then we would be asleep if that was the way
our newspapers read now, Um, but look, these are the
kinds of of men that they were, and the way
(18:48):
they behaved even in their operation, and the way that
they had their managers who were out there operating was
in tune with that. It was aligned with that. So
for example, all of those you know, people that wanted
to strike it rich, we're out in California digging for gold,
and the miners had a problem because they were kind
of staying in shanties essentially, and they didn't have a
(19:10):
safe place to store their gold, so they were, you know,
getting ripped off all the time. There were thieves and
scoundrels out there along with um, the hard working miners
who were you know, when you were asleep. They were
taking your stuff. And so Henry Wells saw that going on,
and he said, look, if you trust Wells Fargo with
(19:31):
your possessions, your gold or whatever it is, your packages,
whatever it is, you will not lose money. We are
going to be here for we are going to be
the trustworthy source for these miners and these customers. So
the company Wells Fargo would only accept to travel with
or to hold what it could afford to lose. In
other words, if what they said at the time, this
(19:51):
is like crazy for the time, if one of their
stage coaches or train cars was robbed, then Wells Fargo
would reimburse the customer and help bring the culprits to justice. Wow. Right,
And so because of that, they were very slow growing
because they could only take as much as they could
(20:12):
afford to cover financially. Now they were making money with
American Express by then, they had a good, you know
seed to start with. Um, so they it's not like
they had no money, but they weren't growing the way
some of their competitors were at the time. So there
was there were a couple of other competitors out there,
one who was literally ten times the size of Wells Fargo.
And Wells Fargo grew, I mean, they had I think
(20:33):
twelve branches within a year or two out West. But
there were you know, these other companies that want gangbusters,
because well, if somebody got robbed them, so be it.
The customer lost their stuff, right, But because they had
this honorable, trustworthy way of operating, they grew very slowly. Ultimately,
it was that conservative business growth that saved their butts
(20:58):
because in eighteen fifty five there was a panic in
the gold markets and their competitors crumbled. But while Spargo
was small enough to withstand that they had their own funds,
they weren't, you know, they weren't hadn't borrowed to get
where they were, and so they were able to weather
that downturn. Was totally secure. Yeah, right, They weren't risking
(21:21):
with other people's money, right. I do have to say, though,
it's interesting that they had a plan like that in
place before. What is it now that covers banks of
the fdi C, Right, like a hundred thousand or two
hundred fifty thousand dollars in your bank account that didn't
exist at the time, and they kind of put that
on themselves. They themselves, right, And if you travel forward
in history, they were like that throughout the nineteen hundreds.
(21:42):
Like they also, uh, you know, weather the stock market crash,
they weathered World War One, they weathered World War two
in much the same way by being conservative and honest
and reliable and trustworthy. Right, I mean, this is how
they survived as long as they did. It was sort
of the core values of the company at the time.
But the thing that was different, I think is that
(22:05):
those you know, in those days, you didn't have to
like write your company mission and and then put policies
in place to enforce it. You just sort of knew
that the people you hired, I think we're good. I mean,
maybe that's me just looking back at the past with
rose colored glasses, but it really does seem like they
were who they were. They hired like minded people and
that's how they ran their business right. Well, I'm sure
(22:26):
having the security too, of especially after all of that
goes down, you're working for the only express company that
made it out there, then that's going to make your cut,
your employees just in general a little more loyal. So
if you operate the business strongly, the people inside of
it noticed that. Yeah, absolutely, And so these guys grew
their business throughout the late eighteen hundreds and into the
(22:47):
nineteen hundreds in large part by acquisition, and they acquired
some pretty famous companies. They created the Overland Mail Company,
which a lot of people have heard of, which didn't
last very long. And they also acquired the Pony Express,
which is very amoss acquired. Yeah, it existed and they
bought it, and it didn't last, and you know that
we could do a whole podcast on just on the
(23:07):
Pony Express, I think. But it's also now a big
part of the legacy of Wells Fargo because they owned it,
uh and they continued to grow that way through acquisition
over many years. But again, remember they weren't really doing
a whole lot themselves for the business Wells and Fargo.
They were in New York doing all kinds of other things.
It was like, I think eighteen sixty eight when Henry
(23:27):
Wells founded Wells College for Women, Fargo was running for
political office and was a mayor, I think it was,
And so they were, Um, they were very much into
serving their communities and giving back as best they could.
These were really good men, and um, when you look
forward to today, you sort of have to wonder what happened.
(23:49):
How did it go from those men doing such good
things and creating this legacy of their brand to where
we are now. Absolutely, and I think that we've covered
that in some of the other episodes too. When you
look at you know, like Sears, for example, it was
the man's goal when he started it was to try
and help people who lived in the middle of nowhere,
(24:11):
to have the accessibility to stuff that people who live
in the city had. That was his goal, that was
his mission. And as long as he was doing that,
even when it turned retail, it was working. But when
that was no longer the goal to provide that service
to the customer number one tip top, everything came crashing. Yeah.
I think those stories have a lot of parallels, and
I think part of it is that the times were
(24:32):
one way in the eighteen hundreds when these companies began,
and they are very different now. And so these companies,
Wells Fargo grew by acquisition and up until modern times.
I mean most of us still remember Rocovia, which is
one of the banks that became a part of Wells Fargo,
and there were several other big name banks throughout the
country that rolled up into Wells Fargo. They all had
(24:52):
their own cultures. Uh, they didn't have the culture of
well Henry Wells and William Fargo. They had their own cultures,
and they were acquiring all nds of small community banks
along the way as well, some of which probably had
great cultures and some that probably didn't. So what happens
to Wells Fargo when all of those cultures come together
that brings us up to modern times, and we'll talk
about that right after this. Okay, Dana, So you said
(25:21):
that the culture of Wells Fargo changed as the times changed,
But what do you mean by that? Aren't people just people?
Were just people? Oh my god, Nick, you totally should
have been a child of the eighties because that is
like right out of the depeche Mode song people are People.
So I totally love that song. It's going to be
(25:49):
a new theme song every time I have that in
my head. Now, well, people are people and now depeche
Mode turnabout is fair playing my friend? And yes, people
are people. But I think society has really changed over
time such that, you know, in the good old days,
and I admit that I might be wearing rose colored
glasses looking back, but I feel like the bad guys,
(26:10):
we're like wearing uniforms like you could pick them out,
you know, like in the cowboy part of the world,
they wore black cowboy hats and and yeah around their face,
and the sheriffs wore stars on their chests, right, and
you can tell the difference. And criminals were snake oil
salesman and everybody could kind of see them coming. Um, now,
(26:31):
I feel like, look at the college admission scandal. The
criminals are your your favorite you know, TV actress, and
your neighbor next door, who's or or the kid in
the college dorm room next to you, And so I
feel like times really have changed. There's so much more
white collar crime now, I think than there was then.
Not that it didn't exist at all, but I think
there's so much more of it now. And you know,
(26:53):
in order for people to sort of stay in line now,
it's almost like they really have to be held in line.
Back then, I think there was a credo to some extent,
if you were an upstanding citizen, you were an upstanding citizen.
If you were in the mob, you were in the mob,
and that was a different creative Yeah, like an unspoken
honor code either way. Right, Yeah, it does feel like
it was that way. I mean you can even look
(27:15):
at politics, right because you can look at like at
George Herbert Walker Bush, who never spoke about himself, who
didn't want to use the word I. I mean, that
was a known thing. And now you look at our
current presidents who were all about themselves. Right. It's just
the world is different, and so I think what we
should do, is you take the list of like the
good stuff that Wells Fargo, the company and the individuals
(27:35):
Wells and Fargo we're doing kind of in the eighteen
hundreds and through the nineteen hundreds, and I'll take the
list of the current scandals and let's just sort of
do a compare and contrast so you can. So let's start.
Let's start with good news. Right. So we talked in
the last part of the show. We talked about, you know,
the women for the College for Women and everything else.
So here's one that I think is a really interesting
(27:57):
kind of progressive point from Wells Fargo is in eighteen
eighty eight, they put a policy in place to all
of their employees company wide that said, quote proper respect
must be shown to all and polite and courteous treatment
of all customers, let them be men, women, or children,
rich or poor, white or black. Way ahead of the time,
(28:23):
I mean, women weren't allowed to have their own accounts
even at that time, right, They weren't allowed to sign
for things that I had to come in and access
their husband's account. A lot of times, I don't know
why I've heard this before. Women would go into the
bank with their marriage certificate to prove they could get
into their husband's account because they couldn't have their own.
That's nuts, right, And I mean think about the culture
for black people at the time. I mean, it was
in the nineteen sixties when we had civil rights, slavery
(28:47):
what just ended not long ago, and they're saying, treat
black people like everybody else in the eighteen hundreds. Fast
forward to the to the odds. Okay, one of the
early UH fraud scannedals that Wells Fargo was accused of
in two thousand nine was charging African American and Hispanic
(29:07):
borrowers more money for mortgages. They were allegedly steering Blacks
and Hispanics into high cost, subprime loans. Yikes, different culture,
different era, different time time. How could that even happen?
If Wells and Fargo were alive, that would not have
(29:28):
been happening, right, especially something that's been in place in
the company for so so long. Here's another interesting good
thing that I've seen that Wells Fargo did back nineteen
o six, the great San Francisco fire after the earthquake
and everything over five hundred. If their employees were out
of work, they lost their homes, they lost their possessions,
they had other things to worry about. And while they
(29:49):
were trying to get their lives back together and not
delivering for Wells Fargo, they still paid their complete salaries
to those employees to make sure that they would be
able to get on their feet. Okay, so that's that's
Wells white hat Wells Fargo in the in the White
years nineteen o six. All right, let's fast forward, uh.
(30:10):
In let's see two thousand ten, Wells Fargo was fined
uh for overdraft practices designed to gouge consumers and profiteer
at their expense, and for misleading consumers about how the
bank process transactions and assessed overdraft fees. So they're basically
ripping off people who already are struggling, because that's why
(30:31):
you bounce a check in the first place. Oh my gosh,
going out of their way to gouge people. When before
they went out of their way at the fire, they
operated straight out of the U. S. Mint because there
were no banks open. They were like, Hey, the Mint's
got our money, we'll just do it there. Yeah. How nuts?
Is that? That's black hat Wells Fargo of modern times.
So here's much more modern little bit of white hat.
(30:52):
Wells Fargo is in the nineteen thirties, right, the stock
market crash in Great Depression. We all know about it
at the time. Wells Fargo is led by Frederick Lippmann,
and while the Great Depression was going on, that only
did Wells Fargo offer loans to veterans from World War
One and the other wars right after to try and say, hey, yeah,
we know everything's gone to you know what, you still
(31:14):
got to get back on your feet and we have
the ability. Oh yeah, and Wells Fargo still continue to
pay all the dividends on every account throughout the Great Depression.
The president, Frederick Clippman even said quote, we will meet
all demands under any circumstances. Yeah. This makes me want
to mention the modern scandal where they were repossessing cars
(31:37):
from veterans. Remember that one, Um, But I want to
get to the cross selling and the uh, the sales
quotas put on the branches in modern times. This is
sort of the crux of the current scandal that one
heard about, right, this was the big modern scandal. So
Elizabeth Warren, of course, we we already heard in this
episode from Maxine Waters talking to the current well the
(31:58):
now former CEO, Tim Flowan. But this was back in
the midst of all the fraud, where Elizabeth Warren is
uh digging into the then CEO John Stump. In your
time as chairman and CEO, Wells has been famous for
cross selling, which is pushing existing customers to open more accounts.
(32:18):
Cross selling is one of the main reasons that Wells
has become the most valuable bank in the world. Other
big banks average fewer than three accounts per customer. But
you set the target at eight accounts. And that's not
because you ran the numbers and found that the average
customer needed eight banking accounts. It is because quote eight
(32:43):
rhymes with great. This was your rationale right there in
your twenty ten annual report. So you have the start
of the company with Henry Wells and William Fargo doing
what they did, riding themselves from town to town to
liver mail and establish a culture of trustworthiness and reliability.
(33:05):
And then you compare that to the CEO John Stump
saying we're gonna sell each person eight accounts, whether they
need them or not, because well, you know, eight is great.
Eight is great. Eight rhymes with great. I think we
could be CEOs, right, and I could have come up
with that. Yeah, I think they could hire Dr SEUs
or or maybe you know, maybe Barack Obama is looking
(33:27):
for a job. Now, that's sam I am, that's Sam
I am. I do not like that's Sam i am.
Do you like green eggs in hand? I do not
like them, sam i am, I do not like green eggs?
And him, he was a good president, so he probably
would have been a better president of Wells Fargo too.
This is exactly what I mean when I say the
(33:48):
culture has changed. You know, this is a country, uh
and maybe a world, but certainly a country in which
it has become all about constant growth and shareholder value.
And it is almos us at any expense. In those days,
Wells and Fargo, in the early days, they were so
conservative and so concerned about their reputation and about serving
(34:08):
their community that they didn't take those kind of risks.
They didn't push that hard because they didn't need to.
They built an incredible, you know, iconic company that lasted
centuries on being reliable, trustworthy, forward thinking, innovative, you know,
open to all cultures and all people, and and supportive
(34:28):
and all of those things, and then now it's about greed. Uh,
it's about money. John Stump, when all this was going down,
in the midst of that fraud, was making you know,
hundreds of times more than the average emplay at Wells
Fargo and taking no responsibility. It's just it's just so
clear when you look back at how the culture of
(34:49):
the country and the culture of the business sort of
faltered together. Uh. You know, the big question I think
going forward is can Wells Fargo come back from this?
Can there legacy that started being all about trust and
all about reliability. Can they get it back? That's the
big question. And we'll get to that right after this.
(35:16):
In the midst of the Wells Fargo scandal of the
last four or five years, CEO John Stump ultimately was
held accountable and he sort of was forced to retire.
Will Air quote that, Um, this is a guy who
we called, you know, Stumpy the clown on our show
while the while the scandal was going on. He was
(35:36):
then replaced by CEO Tim Sloan, And now here comes
Tim Sloan. Can I fix this? This is a guy
who's been with the company for thirty years. He's got
all this experience, he knows what the culture is supposed
to be and he's going to come in and save
the day. So that leads the company to make some
policy changes in fairness. They did um they did stop
(35:58):
the sales quotas for the branches, so that was something,
but the rest of it seemed kind of like lipstick
on a pig, doing things like fancy commercials to win
back your trust. We know the value of trust. We
were built on it back when the country went west
for gold. We were the ones who carried it back east.
We built on that trust. We always found the way
(36:23):
until we lost it. But that isn't where the story ends.
It's where it starts again with a complete recommitment to
you so we can focus on your satisfaction. We're holding
ourselves accountable to find and fix issues proactively because earning
back your trust is our greatest priority. It's a new
(36:46):
day at Wells Fargo, but it's a lot like our
first day or is it. I don't know. Listen, this
is the question that Wells Fargo is struggling with right now.
That commercial was from last year. That was commercial and
you know, the question really is have they overcome their
bad behavior or are they just too big to do so.
(37:07):
I mean, the reality is I pulled most of my
accounts out. There was one I left open that I
didn't use, and it was a credit card account. But
I pulled my accounts out in the middle of the
scandal because I didn't want them to have my money, right,
I did too, same thing, And I mean, I've I've
got a checking account, that's it. And so I said, yeah,
I don't want I don't not rich, I don't have
a bunch of a whole bunch of savings, but what
(37:29):
little I have do I really want these sketchy people
to be in charge of it? And yeah, even for me,
my little single account, it was a pain in the
butt to get it out of there. They were like
trying to dig their teeth in and say, well, you know,
we're really sorry. That doesn't change anything, right, And so
I wasn't able to really track what was happening besides
watching the commercials and and sort of hearing the pr campaign.
(37:50):
I didn't have that personal tied to the bank anymore
in the last couple of years. But I was skeptical
because I just know how big they are and how
hard it is to make a change when you're that size.
So the question then remains, are they making the change? Well,
I ultimately got sucked back in personally over the last
several months because my father's accounts are there and my
(38:11):
father uh is sort of in the decline of age
with Alzheimer's and dementia and those kinds of things, and
so I had to start interacting with Wells Fargo again.
And let me just say, I'm going to shortcut the
story neck two thumbs down, two thumbs down. The customer services. Look,
there were I dealt with some great individual people, but overall,
(38:33):
the system that exists in Wells Fargo was not set
up to serve me as a customer. It's just that simple.
And so that brings me right back to where we
started with Maxim Waters. All the changes that you said
that you've made are not evident, and you do not
have the kind of customer satisfaction that you are alluding to. Again,
(38:55):
is Wales Fargo too big to manage? Yeah, that's the question.
I think, even with the best intentions, it's going to
be almost impossible for them to change the culture of
a company that size. Absolutely, and like we like we
said before, you know, they they acquired a lot of
these small town banks, and I think that was something
(39:16):
they did so good for the longest time. Was even
though it was big Wells Fargo, you still had a
small town feel. And they lost that right around the
financial crisis, and then obviously they lost it in the
corporate offices as well. I don't think there's a way,
as one big, massive thing, you can get back to it.
And it's just like any other relationship after that trust
has been broken that badly, can you ever really trust
(39:38):
them again? Right? And you know, look, I at the
end of the day, all older companies I think that
didn't really secure their founders vision are going to have
this kind of struggle if they haven't already. It's the
same thing we talked about with Sears. It's the same
thing here with Wells Fargo, and I think we're going
to continue to see it over and over again with
these older iconic companies. If they didn't cement that vision
(40:02):
into the culture of the company as it grew, I
don't see how Wells Fargo can survive. And as we
are recording this, the most recent CEO has been forced
to air quotes retire, So that's where we are. They're
going to bring in another guy who's gonna do what
more of the same. How do you change that? That's
the question. And if you're you know, somebody who's growing
(40:23):
a business, maybe the lesson here is to cement your
vision in writing and keep it very clear at the
forefront of the company mission always because once you're gone
and you're out of there, there's no telling. There's no telling.
That is our show for today. This has been Physiography,
and it will be again next time see it then.
(40:47):
Phisiography is produced by the I Heart Podcast Network. I'm
your host Dana Barrett. My co host and producer is
Nick Bean, Our executive producer is Christopher Hasiotis, and Josh
Thame provides audio production. Have questions, just want to give
us feedback or have a company you'd like us to cover.
Email us at info at physiography dot Show, or contact
us on social I'm at the Danta Barrett on Facebook, Twitter,
(41:10):
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