Wells Fargo (1852–1998)

Wells Fargo & Company
Company type	Private (historical)
Industry	Banking, financial services, express delivery
Founded	March 18, 1852; 174 years ago in New York City, United States
Founder	Henry Wells, William G. Fargo
Defunct	1998
Fate	Acquired by Norwest Corporation
Headquarters	San Francisco, United States
Area served	Western United States, international locations including Japan, Australia, Hong Kong, South America, Mexico, Europe
Key people	Henry Wells, William G. Fargo, Lloyd Tevis, John J. Valentine Sr., Dudley Evans, Isaias W. Hellman
Products	Banking, asset management, brokerage, credit cards, insurance, wealth advisory, express delivery services
Parent	Norwest Corporation (from 1998)

Wells Fargo & Company was a prominent American banking institution based in San Francisco, California, which was acquired by Norwest Corporation in 1998. Established on March 18, 1852, in New York City by entrepreneurs Henry Wells and William G. Fargo, the firm capitalized on the flourishing economy of the Western United States during the California Gold Rush.

Both Wells and Fargo were influential pioneers in the express delivery sector and had co-founded the American Express Company in 1850. When American Express's board hesitated to expand westward due to competitive concerns with Adams Express Company, Wells and Fargo independently launched Wells Fargo to establish a strong presence in the Western market.

Wells Fargo’s operations spanned a wide array of financial services such as banking, asset management, brokerage, credit card issuance, insurance, and wealth advisory. Its subsidiaries included Wells Fargo Advisors, Wells Fargo Bank, N.A., Wells Fargo Rail, and Wells Fargo Securities, all contributing to its global reach and diversified service portfolio.

The company’s founders strategically prioritized growth into underserved regions while maintaining a competitive stance against rivals, setting the groundwork for sustained expansion and influence within the financial services sector.

Expansion into Overland Mail services and the Panic of 1855

In 1855, Wells Fargo encountered a significant challenge when California’s banking system collapsed amid reckless speculation. A bank run on San Francisco’s Page, Bacon & Company ensued following the failure of its St. Louis parent bank, prompting numerous financial institutions—including Wells Fargo—to temporarily suspend operations. Although Wells Fargo lost about one-third of its net worth during this crisis, it managed to reopen quickly by retaining sufficient local assets rather than transferring funds eastward. This resilience enabled Wells Fargo to endure the Panic of 1855 while many competitors faltered.

Emerging from this financial turmoil strengthened Wells Fargo’s competitive position: it faced minimal opposition in California’s banking and express sectors and earned a reputation for dependability. Between 1855 and 1866, under the guidance of founder Henry Wells and executives such as William G. Fargo and Lloyd Tevis, the company pursued aggressive expansion into Western transportation and communications. It established its own stagecoach operations, contributed to launching Butterfield Overland Mail (which it eventually controlled), and participated in the Pony Express. This expansion culminated in 1866 with Wells Fargo consolidating overland mail routes stretching from the Missouri River to the Pacific coast.

Initially supporting its banking and express networks through stagecoach services, Wells Fargo’s role evolved when it co-founded the Overland Mail Company in 1857 alongside American Express and other express firms. John Butterfield of American Express served as president of Overland Mail. The company secured a government contract in 1858 to transport U.S. Post Office mail along the southern route from Memphis and St. Louis to California; Wells Fargo acted as banker and principal lender for this venture.

In 1859, Congressional failure to appropriate funds for the Post Office threatened Overland Mail's payments, increasing its indebtedness to Wells Fargo. Growing concerned about Butterfield’s management amid escalating financial risk, Wells Fargo threatened foreclosure in 1860. Butterfield subsequently resigned as president, transferring control to Wells Fargo—although full ownership was only completed with the 1866 consolidation.

Wells Fargo also became involved with the Pony Express during its final six months of operation. Originally launched as a private enterprise by Russell, Majors & Waddell, the Pony Express suffered financial losses due to lack of government subsidies or contracts. After Wells Fargo-controlled Overland Mail secured a $1 million government contract in early 1861 for daily mail delivery along a central route (following disruptions caused by the Civil War to southern lines), Wells Fargo assumed control of the western Pony Express route from Salt Lake City to San Francisco; Russell, Majors & Waddell retained management of the eastern segment.

The Pony Express ceased operations upon completion of the First Transcontinental Telegraph late in 1861. Nevertheless, coordinated express and stagecoach services persisted: from 1862 through 1865, Wells Fargo operated a private express line between San Francisco and Virginia City; Overland Mail managed stage routes throughout Nevada; and Ben Holladay operated lines eastward from Salt Lake City after acquiring Russell, Majors & Waddell’s business.

This deliberate expansion strategy firmly established Wells Fargo’s dominance in Western transportation and communication services during a pivotal era of American commercial development.

Acquisition of Holladay Overland

By 1866, Holladay had established a vast stagecoach network spanning eight western states, posing a significant challenge to Wells Fargo's supremacy. This competition culminated in a consolidation later that year, with Wells Fargo acquiring Holladay's operations. The merger combined the Wells Fargo, Holladay, and Overland Mail lines under the Wells Fargo banner, creating a dominant stagecoach company. Following the merger’s finalization on November 1, 1866, Barney stepped down as president to concentrate on the United States Express Company, and Louis McLane took over the leadership role.

The rise of railroads swiftly diminished the stagecoach industry. Although the Central Pacific Railroad transported Wells Fargo’s express shipments, it did not grant exclusive rights, while the Union Pacific Railroad began to infringe on Wells Fargo’s routes. In 1869, Ashbel H. Barney replaced McLane as president. The completion of the First Transcontinental Railroad that same year substantially reduced stagecoach business and negatively affected Wells Fargo’s stock market performance.

Acquisition of the Pacific Union Express Company

The promoters behind Central Pacific Railroad created the Pacific Union Express Company to rival Wells Fargo. Meanwhile, the Tevis faction purchased Wells Fargo shares at low prices. On October 4, 1869, William and Charles Fargo met with Tevis in Omaha, leading to an agreement for Wells Fargo to buy Pacific Union Express at a premium. This deal granted Wells Fargo exclusive express rights on the Central Pacific Railroad for a decade and provided vital capital investment. Control of the company shifted to Tevis as part of this arrangement.

Ashbel Barney resigned in 1870, after which William Fargo assumed the presidency but resigned two years later to dedicate himself to American Express. Lloyd Tevis then became president of Wells Fargo.

Expansion

Under Lloyd Tevis’s guidance, Wells Fargo experienced rapid growth—its banking and express offices increased from 436 locations in 1871 to 3,500 by the end of the 19th century. The company inaugurated the first Transcontinental Express service spanning several railroads and expanded into East Coast markets by 1888. It was also an innovator in refrigerated freight transportation in California and established branch banks in Virginia City, Carson City, Salt Lake City by 1876, and New York City by 1880. Internationally, express services extended to destinations including Japan, Australia, Hong Kong, South America, Mexico, and Europe. The company began issuing money orders in 1885. John J. Valentine Sr., a long-serving employee, was appointed president in 1892.

Until 1876, both banking and express operations were housed together at California and Montgomery Streets in San Francisco; subsequently, banking moved first to California and Sansome Streets and later relocated again in 1891 to Sansome and Market Streets.

During the early 1890s, several branch banks were sold: Carson City’s branch was sold to Bullion & Exchange Bank (1891), Virginia City’s branch went to Nevada Bank (1891), and Salt Lake City’s branch transferred to Walker Brothers (1894). The New York branch remained operational until merging with Hellman’s bank in 1905.

1900–1940

Following Valentine’s death in December 1901, Dudley Evans assumed the presidency in January 1902.

In 1905, Wells Fargo divided its banking and express divisions. Financier Edward H. Harriman, notable for his influence over Southern Pacific and Union Pacific Railroads, took control and merged Wells Fargo’s banking operations with Nevada National Bank—a financial institution established by silver industry leaders James Graham Fair, James Cair Flood, John William Mackay, and William S. O’Brien—creating Wells Fargo Nevada National Bank.

The newly formed bank commenced operations on April 22, 1905, with Isaias W. Hellman serving as president and a board of directors that included Harriman, Dudley Evans, and Levi Strauss, who joined by 1906.

Evans continued to lead Wells Fargo & Company Express until his passing in 1910; he was followed by William Sproule and then Burns D. Caldwell in 1911. In 1918, during World War I, the government mandated consolidation of express companies into American Railway Express, appointing Caldwell as chairman. Wells Fargo maintained limited international express services until the 1960s and operated armored car services under Wells Fargo Armored Security Corporation. This armored division merged with Loomis in 1997 and currently functions as Loomis.

Hellman’s leadership faced significant challenges after the 1906 San Francisco earthquake and fire devastated much of the city’s commercial area, including the bank’s headquarters. Despite this destruction, the bank’s vaults and credit facilities remained secure, allowing it to support swift rebuilding efforts. Deposits increased dramatically from $16 million to $35 million within a year and a half.

The Panic of 1907 dealt a heavy blow to Wells Fargo, resulting in weekly deposit withdrawals amounting to $1 million over a six-week period. The bank’s recovery was gradual in the following years.

Upon Hellman’s death in April 1920, his son Isaias Jr. briefly took over before passing away a month later. Frederick L. Lipman was then appointed president. Lipman emphasized growth while maintaining prudent banking policies. In 1924, Wells Fargo Nevada National Bank merged with Union Trust Company to form Wells Fargo Bank & Union Trust Company. The bank prospered throughout the 1920s and was well-equipped to endure the Great Depression, offering substantial support after the banking crisis of 1933.

Lipman retired in January 1935, with Robert Burns Motherwell II succeeding him as president.

1940–1970

Wells Fargo experienced consistent growth during the wartime period. In 1943, Isaias W. Hellman III became president and spearheaded expansion efforts by acquiring First National Bank of Antioch in 1954 and First National Bank of San Mateo County in 1955, alongside developing a branch network throughout San Francisco. To capitalize on its frontier heritage for broader growth, the institution rebranded as Wells Fargo Bank in 1954.

In 1960, Hellman arranged a merger with American Trust Company to create Wells Fargo Bank & American Trust Company; Ransom M. Cook served as president while Hellman became chairman. The name reverted back to Wells Fargo Bank in 1962. By 1964, under the leadership of president H. Stephen Chase and chairman Cook, the combined bank ranked as the eleventh largest in the United States and expanded its global footprint with offices established in Tokyo, Seoul, Hong Kong, Nassau, Mexico City, São Paulo, Caracas, Buenos Aires, and Singapore.

On November 10, 1966, Richard P. Cooley was named president and CEO at age 42 after joining the company in 1949; Stephen Chase assumed the role of chairman. In 1968, Cooley recruited Ernest C. Arbuckle—then dean of Stanford Graduate School of Business—to serve as chairman.

In 1967, Wells Fargo entered consumer credit by introducing a Master Charge card (now MasterCard) alongside three other California banks to challenge Bank of America’s dominance; initial participation included approximately 30,000 merchants.

Cooley prioritized expanding branches statewide after Federal Reserve restrictions blocked acquisitions in Southern California—a costly approach that suppressed profits during the late 1960s. In 1968, Wells Fargo transitioned from a state charter to a federal charter to facilitate creation of subsidiaries specializing in equipment leasing and credit card services more effectively. That same year featured acquisitions such as Bank of Pasadena and First National Bank of Azusa.

In 1969, Wells Fargo established a holding company named Wells Fargo & Company and acquired full rights to its name from American Express, granting unrestricted usage across all financial services except for armored car operations previously divested.

1970–1980

From 1970 through 1975, Wells Fargo experienced the most rapid domestic profit growth among U.S. banks. Following 1971, a surge in business lending led the bank to rely on short-term borrowing from the Federal Reserve to provide loans at elevated interest rates. Although the 1973 monetary policy tightening curtailed profit margins, Wells Fargo leveraged the opportunity presented by rising passbook savings rates by being the first to offer 5%, significantly increasing its retail savings share in California. This strategy helped reduce its dependence on Federal Reserve borrowings and offset the impact of higher deposit expenses.

In 1973, the bank redirected its lending focus toward medium-sized corporate and consumer loans with higher interest rates. By 1974, under the leadership of future president Carl E. Reichardt, Wells Fargo fortified its balance sheet and expanded its real estate loan portfolio, concentrating on home and apartment mortgages in California while steering clear of more speculative commercial developments.

On the international front, Wells Fargo encountered setbacks including a $4 million loss from its 25% ownership in West Germany’s Allgemeine Deutsche Credit-Anstalt, the collapse of its London-based joint venture Western American Bank amid the 1974 recession, and $2 million in losses due to adverse currency fluctuations in 1975. As a result, the bank slowed its overseas growth, prioritizing the establishment of wholly owned branches over partnerships.

During the latter half of the decade, Wells Fargo led investment services by attracting more new accounts from major pension funds (1975–1980) than any rival. The bank’s marketing efforts emphasized modern portfolio theory and indexing aligned with the S&P 500, fueling business expansion.

Chairman Arbuckle retired in 1977; Cooley assumed the role in 1978 alongside Reichardt’s promotion to president. That same year, a key legal triumph in California solidified Wells Fargo’s competitive position when the Supreme Court of California upheld nonjudicial foreclosure as constitutional. This ruling enabled faster foreclosure processes that supported affordable credit despite a generally plaintiff-friendly judiciary under Chief Justice Rose Bird.

By the end of the decade, growth decelerated: earnings increased only 12% in 1979 compared to an average annual rise of 19% during 1973–78. In 1980, Cooley acknowledged that expansion needed to be tempered due to pressures on capital and liquidity.

1981 MAPS embezzlement scandal

In January 1981, a routine audit at Wells Fargo's Miracle Mile branch revealed an embezzlement totaling $21.3 million—the largest electronic banking fraud in U.S. history at that time. Lloyd Benjamin "Ben" Lewis, an Operations Officer based at the Beverly Drive branch, conspired with Sam "Sammie" Marshall, president of Muhammed Ali Professional Sports, Inc. (MAPS), to defraud Wells Fargo between 1978 and 1981. Lewis, who also served as a MAPS director, fabricated false debit and credit vouchers benefiting both the boxing promotion company and its chairman Harold J. Smith. Lewis personally received over $300,000; he pled guilty to charges of embezzlement and conspiracy and testified against his accomplices in exchange for a reduced sentence of five years.

Following this scandal, Wells Fargo CEO and chairman Richard P. "Dick" Cooley resigned in late 1982; he described Lewis’s scheme as “brilliantly simple,” having circumvented the bank’s audit controls. In response, Wells Fargo introduced mandatory consecutive two-week vacations for employees to prevent similar frauds—Lewis had never taken time off during the nearly 850-day fraud period, which allowed him uninterrupted access to manipulate funds. Muhammed Ali was compensated for use of his name but was otherwise not involved.

Early 1980s Recession

During the early 1980s, Wells Fargo experienced a decline in its financial results. Cooley declared intentions to reduce the bank's international presence and concentrate efforts on the California market. In January 1983, Reichardt took over as chairman and CEO, replacing Cooley, who transitioned to Seafirst Corporation. In contrast to the banking sector’s general trend toward global expansion, Reichardt implemented stringent cost-cutting measures by closing 100 branches, eliminating 3,000 positions, and shutting down European offices. Paul Hazen succeeded Reichardt as president in 1984.

Rather than capitalizing on deregulation within the banking industry, Reichardt and Hazen focused on bolstering Wells Fargo’s retail operations in California by improving services such as an extensive automated teller machine (ATM) network and launching proactive marketing campaigns.

In September 1983, Wells Fargo was the target of the White Eagle Robbery at its West Hartford facility—then the largest cash theft in U.S. history—carried out by a Puerto Rican independence organization. The FBI apprehended those responsible, with two individuals receiving lengthy prison terms.

Acquisition of Crocker National Corporation

In May 1986, Wells Fargo purchased Crocker National Bank from Midland Bank of the United Kingdom for roughly $1.1 billion. This acquisition doubled Wells Fargo’s branch footprint in southern California and expanded its consumer loan portfolio by 85%. The purchase price represented about 127% of Crocker’s book value, which was below the industry norm of approximately 190%. Midland Bank retained $3.5 billion in problematic loans. This transaction elevated Wells Fargo to become the tenth-largest bank in the United States. Following integration, the company eliminated 5,700 jobs, closed 120 overlapping branches, and achieved significant cost reductions.

Prior to and following the Crocker acquisition, Reichardt and Hazen continued to streamline operations by divesting non-core business lines—including real estate services, residential mortgage servicing, and corporate trust functions—and shutting down more than 70 domestic branches along with 15 international locations. In 1987, Wells Fargo allocated substantial reserves to cover potential loan losses in Latin America, especially in Brazil and Mexico; these provisions affected net income but by mid-1989 most of these debts had been either written off or sold.

In May 1988, Wells Fargo further expanded by acquiring Barclays Bank of California from Barclays plc. The bank attempted but ultimately failed to enter the Texas market through a bid for Dallas-based FirstRepublic Corporation that same year. Early in 1989, it diversified into full-service brokerage via a joint venture with Japan’s Nikko Securities—forming Wells Fargo Nikko Investment Advisors—and simultaneously exited all remaining overseas offices.

On August 24, 1989, a California appellate court ruled that Wells Fargo was not responsible for violating the implied covenant of good faith despite adopting a stringent stance toward borrowers. This legal decision enabled Wells Fargo to continue enforcing credit rigorously without facing tort liability risks, thereby preserving its competitive edge by offering low-interest loans while effectively managing default exposure.

Digital Banking Services

Wells Fargo introduced its personal computer banking platform in 1989 and became a pioneer in online banking by launching web-based account access in May 1995—representing a major advancement in digital financial services.

Early 1990s Recession

In the early 1990s, Wells Fargo Bank grappled with difficulties stemming from high-risk real estate loans made in the late 1980s but managed to substantially improve its loan-loss ratio. Under the guidance of Reichardt and Hazen, the bank leveraged opportunities in the California market. In 1991, Wells Fargo expanded its footprint by purchasing 130 branches from Great American Bank for $491 million, reinforcing its presence in the region. Despite facing economic headwinds, the bank demonstrated robust financial performance, with net income increasing from $283 million in 1992 to $841 million by 1994. The company reduced its staff by more than 500 employees in 1993 while simultaneously adopting technological advancements—such as vending stamps through ATMs and collaborating with CyberCash to provide internet services—that boosted operational efficiency and enhanced customer service.

By late 1994, after delivering a remarkable 1,781% return to shareholders over a twelve-year span, Reichardt stepped down, handing over leadership to Hazen. Entering 1995, Wells Fargo ranked as California’s second-largest bank and seventh-largest nationwide, holding assets worth $51 billion. Under Hazen’s strategic direction, the bank refined its loan portfolio, broadened service offerings, and cut operating expenses. In that same year, Wells Fargo divested its Nikko Investment Advisors unit to Barclays PLC for $440 million.

Proposed Merger with American Express

In 1995, Wells Fargo considered merging with American Express—both firms tracing their origins to founders Wells and Fargo—in an effort to grow their global reach. However, disagreements over management control and concerns about integrating differing technology systems stalled progress. American Express was engaged in expensive technology upgrades that lagged behind Wells Fargo’s more advanced infrastructure, creating potential integration difficulties. Additionally, regulatory complications emerged due to American Express’s ownership of Investors Diversified Services (American Express Financial Advisors), which would have necessitated divestiture. Consequently, the merger plans were ultimately abandoned.

Acquisition of First Interstate Bancorp (1996)

Toward the end of 1995, Wells Fargo initiated a hostile bid for First Interstate Bancorp, a Los Angeles-based banking holding company with $58 billion in assets and 1,133 branches spanning California and twelve other western states. The initial offer from Wells Fargo in October 1995 was valued at $10.8 billion.

Other contenders included Norwest Corporation, Bank One Corporation, and First Bank System. First Bank System reached a merger agreement with First Interstate in November for $10.3 billion but withdrew in January 1996 due to regulatory obstacles. Subsequently, Wells Fargo secured a merger deal and announced the acquisition in January 1996 at $11.6 billion. The merged institution controlled approximately $116 billion in assets, making it the ninth-largest bank nationwide.

Wells Fargo aimed to realize $800 million in annual cost savings within eighteen months and revealed plans to reduce its workforce by 16%, equating to about 7,200 positions by the end of 1996. Nevertheless, integration issues surfaced rapidly: technical failures led to lost deposits and bounced checks; branch shutdowns caused customer queues; and cultural differences became apparent. Wells Fargo’s technologically driven banking approach clashed with First Interstate’s traditional relationship-focused model, resulting in executive departures and loss of clientele.

Merger with Norwest (1998)

After experiencing challenges with the First Interstate merger and facing a downturn in financial results, Wells Fargo agreed to a cooperative merger with Minneapolis-based Norwest Corporation in June 1998, finalized in November at a value of $31.7 billion. Despite Norwest technically being the surviving entity, the combined organization adopted the Wells Fargo name due to its stronger brand presence and California headquarters, which held $54 billion in deposits compared to Minnesota’s $13 billion.

Paul Hazen, who served as Wells Fargo’s chairman, continued as chairman of the merged entity, while Richard Kovacevich from Norwest took on the roles of president and CEO. The unified bank became the seventh largest in the United States, boasting $196 billion in assets, $130 billion in deposits, and a customer base of 15 million spanning retail banking, finance, and mortgage services. Its operations encompassed more than 2,850 branches across 21 states; Norwest Mortgage maintained 824 offices nationwide; and Norwest Financial operated close to 1,350 offices throughout North America and Latin America.

This merger’s integration process was notably smoother than prior attempts, attributed to a more extended timeline of two to three years rather than a few months and more conservative cost reduction goals set at $650 million annually within three years. Workforce cuts were implemented gradually over two years, affecting between 4,000 and 5,000 employees instead of immediate large-scale layoffs.

Key dates

1852: Henry Wells and William G. Fargo, founders of American Express, launched Wells Fargo & Company to deliver express and banking services throughout California.
1860: Wells Fargo gained control of Butterfield Overland Mail, managing the western segment of the Pony Express.
1866: A "grand consolidation" merged Wells Fargo with Holladay and Overland Mail stage lines under the Wells Fargo banner.
1872: Lloyd Tevis, associated with the Central Pacific "Big Four," took control of Wells Fargo, securing express service rights for the Transcontinental Railroad.
1905: Wells Fargo separated its banking operations from express services; its bank merged with Nevada National Bank to create Wells Fargo Nevada National Bank.
1918: During wartime, the U.S. government nationalized Wells Fargo's express franchise as Railway Express Agency; afterward, the bank concentrated on commercial markets.
1923: Wells Fargo Nevada merged with Union Trust Company to form Wells Fargo Bank & Union Trust Company.
1954: The institution shortened its name to Wells Fargo Bank.
1960–62: Merged with American Trust Company and briefly operated as Wells Fargo Bank American Trust Company before reverting to Wells Fargo Bank.
1968: Switched to a federal banking charter as Wells Fargo Bank, N.A.; merged with Sonoma Mortgage via a $10.8 million stock transfer that made Henry Trione a significant shareholder until overtaken by Warren Buffett and Walter Annenberg.
1969: Established Wells Fargo & Company holding company with Wells Fargo Bank as its subsidiary.
1982–83: Northwest Bancorporation acquired Dial Finance (later renamed Norwest Financial Service) and rebranded as Norwest Corporation.
1986–88: Wells Fargo expanded by acquiring Crocker National Corporation, Bank of America's personal trust division, and Barclays Bank of California.
1991: Purchased 130 California branches from Great American Bank for $491 million.
1995: Became the first major U.S. financial institution to provide Internet banking services.
1996: Acquired First Interstate Bancorp for $11.6 billion, significantly boosting market share.
1998: Norwest Corporation acquired Wells Fargo Bank but retained the Wells Fargo brand due to its higher recognition.