Word: amexco
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...Amexco's enormous holdings of all kinds of currencies amply insulate it against any monetary crisis. Executives at Lower Manhattan headquarters will not say how many dollars they unloaded just before the greenback's most recent fall, but money men believe that the company came through the ordeal with a tidy trading profit. More important, Amexco officers saw the succession of crises as an opportunity. They heavily advertised their 250 overseas offices (which handily outnumber the 127 U.S. embassies around the world) as a haven where tourists could count on turning unlimited amounts of dollar travelers checks into...
...policy has paid off handsomely by helping to boom Amexco's sales of travelers checks to about $5 billion a year, or two-thirds of all those sold in the world. Many of these sales earn Amexco a double profit, because buyers of the purple papers are making what amounts to an interest-free loan to the company. Right now, Amexco holds nearly $1 billion in cash paid by customers for travelers checks that the buyers have not yet used. Officers have salted most of it away in municipal bonds, which yield as much as 5% a year taxfree...
...Amexco hardly needs currency crises to prosper. Diversification is turning it into more of an insurance and banking colossus than a travel company. Fireman's Fund, a group of life and property insurers that American Express acquired in 1968, accounted for nearly two-thirds of the company's $1.6 billion revenues last year. In addition Amexco runs an international banking division with $1.8 billion in assets, manages five mutual funds, and owns 25% of Donaldson, Lufkin & Jenrette, a major Wall Street investment house...
...Amexco's growth enabled it to survive a blow that might have shattered another company. In 1963, an obscure subsidiary, American Express Warehousing, was duped into issuing warehouse receipts for the nonexistent salad oil of Speculator Anthony De Angelis. American Express in 1967 agreed to pay $60 million to settle creditors' claims, half immediately, the rest in annual installments of $5,000,000 each year through 1973. The payments do not reduce Amexco's current reported profits because they are charged against earnings retained from prior years, and the company's growth has given it enough...
...growth has created an unusual demand for young executives, and Clark has developed an equally unusual method of training them. Every year Amexco assigns six or seven new graduate-school alumni to be management consultants within Amexco. Each one studies a particular new business opportunity or competitive threat and develops a program to deal with it. By the time they are through, says Clark, "they know the company inside out," and are usually enthused about it and ready for major operating responsibility. Meanwhile they save American Express a consultant...