Description
In the very uncertain year of 1939, Charles E. Merrill and Winthrop H. Smith came up with a radical idea for investing: democratize the stock market and bring “Street to Main Street.” Together they created a company that would earn the trust of small investors by putting its clients interest first. To achieve this, they trained their brokers and compensated them with salaries and bonuses rather than commissions. But most important, they set down a series of guidelines for employees that came to be known as the Principles. These stated unequivocally:
Our customer’s interest MUST come first. Upon our ability to satisfy him rests our chance to succeed.
While the rest of Wall Street scoffed, Merrill and Smith put their idea into action. Merrill Lynch expanded capital markets and fueled the growth of the American economy after World War II.
O’Neal, who was about to become the firm’s chief executive officer, did not understand the Principles, nor did he appreciate the nurturing culture and values — known collectively as “Mother Merrill” — that had made the firm one of the most successful and respected companies in the world. Without these in place, Smith was sure the company would falter.
He was right.
Under O’Neal, the firm demonstrated record short-term record profits for a few years, but they masked an underlying problem, and in 2007 it deteriorated steadily. Finally, in 2008 the iconic but now highly leveraged Merrill Lynch, its liquidity disappearing and its share price plummeting, was sold to Bank of America.
Catching Lightning in a Bottle the first history of Merrill Lynch-traces its impact on the world of finance from the day Charlie Merrill opened his one-man shop on January 6, 1914, to the final shareholder meeting prior to its acquisition by Bank of America on December 5, 2008. Smith also weaves in his personal experience and observations.
As the son of a founding partner, the author knew every Merrill Lynch CEO from Charlie Merrill to John Thain.
While the book details the drastic decline of the company between 2001 and 2008, it also tells the story of the real Mother Merrill and how the company’s principles and unique culture, valued and maintained by its leaders and employees, enabled it to grow, innovate and become one of the leading private wealth and investment banking firms in the world.