[Baek Young-ran's Global Financial History] The Beginning of Merrill Lynch: "From Wall Street to Main Street"

Salesman Merrill and Bond Expert Lynch
First Securities Firm Founded in 1914
Encouraged Ordinary People to Invest Over the Wealthy
Popularized Securities Through Investment Lectures
Regarded as the King of Retail Investors

How was the modern securities market created? It did not start from the wealthy's "Wall Street" but from the ordinary people's "Main Street." When the number of securities accounts was only about 50 in the early days, the U.S. securities market performed very limited brokerage activities. It was by no means a securities firm in the modern sense.

The modern securities firm was born when Merrill Lynch was established in 1914. Merrill Lynch was a company created by the collaboration of the natural salesman Charles Merrill and bond specialist broker Edmund Lynch. In the 1930s, Charles Merrill secured management rights and brought about innovative changes. Until then, securities firms operated only local business activities based in Wall Street offices. They merely provided rumor-based information or ran errands on behalf of investors. Merrill tried to change this reality.

Unlike the existing companies that operated haphazardly, Merrill and Lynch managed the company systematically. They paid stable salaries to sales employees and abolished customer service fees. They disclosed the company's management status, performance, partners' shares, and investment details through annual reports.

Merrill launched a promotional campaign called "Wall Street to Main Street" to attract ordinary citizens. He firmly believed that securities also needed advertising. He considered the biggest obstacle was that general investors were ignorant of securities, so he provided education and information programs through advertising.

Merrill placed full-page investment guide advertisements in nationwide newspapers. After seeing these, about 1,000 new customers joined daily. Merrill lectured them on how to invest. To enable more people to invest in securities, he introduced a franchise system, leading the popularization of securities.

By the 1950s, Merrill Lynch became the largest securities firm in the United States. Merrill Lynch revolutionized the securities brokerage business itself. They abolished service fees and paid salaries to sales employees instead of commissions. Merrill's management method was transparent. The company's management status, partners' shares, and investments were fully disclosed.

By the time Merrill died in 1956, Merrill Lynch had grown to have 104 partners in 110 cities. Merrill Lynch handled 10% of the total trading volume of the New York Stock Exchange. The company's active accounts reached 300,000, and assets amounted to 500 million dollars. They also ventured into corporate acquisitions, successively acquiring chain stores such as Safeway and Grand Union.

Merrill's market influence was overwhelming. Individual investors decided their investments based on Merrill Lynch's stock recommendations and evaluations. Merrill, the king of retail investors, was by no means inferior in power to JP Morgan, the king of investment banks.

Baek Youngran, Representative of History Journal